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From the Long Tail to the New Normal

In this next installment of my ‘connect the dots’ series I am going out on a bit of a limb. My objective here is to help people understand the importance of ‘New Normal’, in writing this I have a better sense of it myself. Working backwards, the ‘New Normal’ is very similar in concept to what Seth Godin calls “Weird”. The best way for me to describe ‘Weird’ is that it is the rest of the story, left out in most Long Tail discussions. The Long Tail, as discussed by Chris Anderson, talks about the outliers, the ones who live and purchase at the edges of the spectrum. In other words, the Long Tail does not talk too much about the rest of the distribution, at least not from the customer-centric perspective. While I have heard New Normal used before, I have not seen many illustrations of what it might look like (other than teenagers walking down the street texting from a mobile phone).

The value of the diagram is to illustrate to others, using specific examples and to talk about the ‘New Normal’, moving beyond buzzwords or hyperbole.

The New Normal has been and can be used to understand many of the changes and challenges many people have been talking about for a while now. Ideas such as; The Social Customer, The Collaborative Organization, Social CRM, Social Business  and more might be better understood with a simple illustration.  Think about the distribution of communication channels used 5 years ago, versus now. We simply have more choices. This is not only about customer communications, think about the ways in which you communicate with your peers now, versus 5 years ago. Would it be interesting to chart some this with your own data?

What exactly is ‘New’ about the New Normal

When applied to a business context, the bell curve is being ‘flattened’.  While Chris Anderson and peers talked about Amazon and Netflix –this is now about your products, services and your customers. The long tail is now the ‘tail wagging the dog’. Let’s bring this a little closer to home; the customer journey. What follows is an objective view, with some sweeping assumptions and data without research data as the foundation. For the purists among you, I am focused on the journey and channels of communication, not the product economics of weird, nor long tail.

Consider the number of modes of communication that a customer used from evaluation to purchase for your product 10 years ago (If you did not have a product 10 years ago, think of your own journey). There might have been a Yahoo search, then a phone call. Maybe an email and a website visit. For the sake of this conversation, let’s speculate that the number of channels used averaged 3 and for 70% of the customers they used between 2 and 4 channels. The rest likely used between 1 and 5 channels. This brings us really close to a pretty, normal distribution, though slightly narrow and steep.

How about today? What would the number of channels look like for the same (or similar) product purchase journey? Again, not scientific, but the data is likely available for your business – Could we guess average of 4 channels? This is just one channel more, on average, but it changes the game. Based on the flattening of the curve, to get to that 70% of your customer base it is likely something like “70% of the customers use between 2 and 7 channels; a pretty big range, not as simple as it used to be. The key point here is that you need to dig in deeper and understand what they are doing on each channel. How many channels would we need to include to get to 95% of your customer population (the -2σ to 2σ in the illustration above)?

The important part of the flattening is not only the reduction in the middle, it is the increase on the edges. I want to be clear on a few things. The new Normal for your customers is dependent upon where they have been. The pace of change is determined by you and your customers, not by a consultant or analyst. Just for fun, if you want to see a Normal distribution in action, take a look at this graphic of the snow in Vermont, as it careens off the bell curve in 2012.  All I can say is, I hope this does not represent the ‘New Normal’. There is a whole lot more to this story – just think about it. As always, the time Sword Ciboodle allows me to think through these concepts is greatly appreciated!

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  • Esteban Kolsky March 26, 2012, 7:39 PM

    Mitch,

    Good topic and very nice writeup. One thing I cannot get through my thick skull — and the picture above does not help.

    Are you saying that the long tail has flattened the curve to the point that what used to be standard Gaussian distribution (i.e. Bell Curve) is now a flat line (or almost flat) with the long tail becoming a more marked (and important) event? In other words, what used to be mainstream and the mass market is no longer a reality (or won’t be soon)?

    If not, please correct me — if yes, very interesting concept (may agree with it, circumstances rule here) but not what I got from the writing… then again, my first grade reading level may be culprit here.

    Thanks
    Esteban

    • Mitch Lieberman March 26, 2012, 8:19 PM

      Esteban,

      Thanks for the thoughts. Your sense of the core idea is quite accurate. The idea of mass customization, versus mass markets is the central theme of Seth Godin’s book, referenced below (and throughout to be fair). While I suppose the end-point is a flat line, the reality is that is a long way off, my opinion.

      That said, the bell curve has changed shape, wider – the technical term is that the variance is larger. When writing the post, I was going to use an example of a very hard exam in school, with an average of 60 and scores from 20 to 90. This compared with a very easy exam where the scores range from 80 to 100, average 90.

      My goal was to extend the “Weird” concept to Multi-channel, and the explosion of channels. I guess I missed a few dots.

      Mitch

  • grahamrhill April 4, 2012, 2:17 AM

    Hi Mitch

    Another interesting post. But one that left me wondering about the long-tail and the dynamics of power-law distributions that underlie them.

    Your post states that we are entering a period of the ‘new normal’ characterised by, well, all things social. It then goes on to say that yesterday’s normal was customers using a mean of 3 and 70% of them using 2-4 channels to communicate with organisations. In contrast, today’s new normal is customers using a mean of 4 and 70% using between 2-7 channels. Finally, it say that the increase from a mean of 3 channels to a mean of 4 makes all the difference! That may be true, but so what if it is.

    According to that wonderful thing, the Internet, Amazon has over 1,800,000 print books for sale and 800,000 electronic books on the Kindle. And Netflix has over 100,000 DVD titles for rent. This is the land of huge numbers of alternatives where according to Anderson, low-cost delivery means companies can serve the single buyer of an unusual book and still make a profit. This is the land of the long-tail, the power-law distribution and as quantitative financier Nicholas Taleb wrote, of Black Swan events.

    If the long-tail is all about distributions that play out over very large numbers of alternatives, how on Earth does that relate to an increase in the mean number of channels from 3 to 4? Fact is, it doesn’t. The slowly increasing use of new channels, like those provided by social media, almost certainly falls entirely within an old normal Gaussian distribution. Sure, many people are starting to use an additional channel, but that is no different from people starting to use the phone when only letters were available, or starting to use email. To mangle the great Bard, “One new channel doth not a long-tail make”.

    The long-tail is a powerful, if not misunderstood phenomena that occurs widely in the natural world. It is a mistake to use it in situations where it clearly does not apply. This is one of those situations.

    Back to the Gaussian drawing board.

    Graham Hill
    Customer-centric Innovator
    @grahamhill

  • Mitch Lieberman April 4, 2012, 12:21 PM

    Graham,

    I appreciate your thoughts, and you are entitled to your opinion. But, the post is not about the long tail. If you feel better, I will not talk about it any more. The simple point is to pay attention to the edges.

    Mitch

    • grahamrhill April 4, 2012, 12:30 PM

      Hi Mitch

      I accept that the post is about the edges, in spite of it starting off talking about the long-tail and even having a picture of an underlying power-law distribution.

      I wonder what would happen to the picture if instead of moving contacts from the centre to the fat tails, it actually increased the overall number of contacts as well as adding new types of contacts. Anecodotal evidence suggests that social channels may be good at making initial contact but are often poor at resolving customer problems. This would likely lead to additional contacts, perhaps quite a number of them.

      And then there are all those pesky contacts from people who are not actually customers at all, yet still feel empowered to contact companies as though they were. Clearly there is much more to this than just ever fattening tails.

      Something to think about.

      Graham Hill
      Customer-centric Innovator
      @grahamhill