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‘Tis The Season

December 11, 2012 1 comment

As we move closer to the holidays, many things are once again cropping up, just like clockwork.  Some – including the airing of The Christmas Story and It’s a Wonderful Life – are always welcome.  Others, like frenzied mall traffic and egg nog, you want to forget.  And then there’s the blitz of year-end predictions – just like holiday songs, they can be a mixed bag.

I promise I won’t declare 2013 “The Year of fill in the blank”.  But as we look forward to the New Year, there are some trends that CMO.com highlighted earlier this year that are worth revisiting. In fact, it’s my view that three are going to be increasingly important for B2B CMOs to pay attention to as we look toward 2013:

1.      Show Me the Money – I mean it.

With the economy teetering on the edge of what many are calling a “Fiscal Cliff,” I can’t stress enough how important marketing ROI has become in our field.  As I noted previously, what matters most is what has the most measurable impact on sales and customer retention.  Did sales increase, did sales velocity increase, did average customer value increase? What about marketing to sales qualified lead conversion ratios and customer retention rates, and what was marketing’s measurable impact on any and all these numbers?  There are many ways to objectively demonstrate relative contribution by marketing.  Getting agreement on what to measure and what success looks like is key to showing the true value that marketing contributes.

2.      The Silos are Broken

Marketing is no longer viewed as a stand-alone function. It is now expected to strategically drive more of the customer experience to help support customer acquisition, expansion, loyalty and retention goals.  As one CMO recently told me, “I need to prescribe the ideal customer experience at every touch point – Web, call center, retail store, etc. – regardless of reporting structure.  I’m providing guidance on how to drive a better customer experience so our company can optimize every interaction and drive positive word-of-mouth momentum.”  This new dictate applies equally well to B2B and B2C marketers.

3.      Word of Mouth Spreads

As CMO.com notes, social has proven to have vast benefits for all companies that become adept at it.  While that’s a big “if” in some cases, the role of social media is relentlessly increasing as it becomes more prevalent.  Companies that once turned a blind eye to certain channels like mobile or Twitter or LinkedIn are now being forced to embrace them all – simultaneously. Or else they risk losing impatient customers who can go elsewhere for better customer experiences.

There’s little doubt that B2C organizations – especially those with millions of customers that come into daily contact with consumers – have more opportunities to show they’ve embraced this. At Pega, while our target-account approach differs from many other B2B organizations, social has become an integral and formidable medium for us to leverage throughout our marketing and communications. We’re active on Twitter, Facebook, and LinkedIn to ensure we’re engaging with our customers appropriately, but also so we can continue building our brand awareness. As we move into 2013, we’ll continue to increase participation in these areas, with the objective that we’ll be drawing more attention to our increasingly known brand.

For all organizations, the key to getting ahead in this area will not only be proactive listening.  Companies mastering social will be continually participating in opportunistic ways to drive customer engagement and improve business outcomes.  That ultimately impacts the way enterprises respond, what solutions they sell, how they sell them and their relative market success.

Sure, this is no easy task. But then again, neither is enduring those long lines and packed parking lots.

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Q/A on Social Media with CMO Grant Johnson

This Q/A with Grant Johnson, conducted recently by Drew Neisser, CEO of Renegade, a NYC-based social media and marketing consultancy, also ran here on The Drew Blog.

B2B companies for the most part have been playing catch up to their B2C counterparts in the social media arena. One company that is coming on strong in this area is Pega, a company that helps other companies be more focused on their customers via BPM and CRM software solutions. I was delighted to able to catch up with Grant Johnson, Pega’s CMO as part of the soon to be released Social Media Fitness Study. (BTW, CMO’s can catch up with Grant at The CMO Club Thought Leadership Summit starting April 26th in NYC.)

DN: Large B2C companies significantly outscored large B2B companies in this study. Why do you think this is the case?
While social has proven to have vast benefits for all companies that become adept at it, there’s little doubt that B2C organizations – especially those with millions of customers that come into daily contact with consumers – have more opportunities to show they’ve embraced this. At Pega our target-account approach differs from many other B2C organizations. That’s not to say we’re not embracing social media, because we are, but we’re leveraging it in a far more targeted way than most B2C organizations do based on the size of our audience.

DN: Can you speak to the role social media plays in Pega’s overall marketing mix?
Social has become an integral and formidable medium for us to leverage throughout marketing as we at Pega view it as part of our overall customer-centric market approach. We’re active on Twitter, Facebook, LinkedIn to ensure we’re engaging with our customers appropriately but also so we can continue building our brand awareness. We’ve added another dedicated full time resource to further our social media efforts and we’re confident that this role will continue to increase.

DN: You mentioned that social wasn’t gaining as much traction as you’d like. What are doing to address this?
I’m actually dedicating much more resource as traction is building faster this year.

DN: Is there a hope that if more employees are active in social that this could benefit the whole company?
We are encouraging more people to be involved in our overall social media efforts and we want to make sure the right people are engaged with customers and prospects across the whole client management lifecycle, whether it’s account executives, industry solutions, public relations, as well as ensure they know what’s appropriate and what’s not in this medium.

DN: Lots of companies especially B2B struggle to develop engaging content. Do you think this is category wide problem?
Yes. Many companies have reams of content, but it’s too centered on company promotion vs. customer and prospect engagement, when taking into consideration what stage of the buying cycle they are in (e.g. someone just surfing your Web site for the first time is not ready for a “how to pick a supplier” checklist). Also, we want to make sure we present content in the most digestible way possible. While they’ve no doubt proven useful at many things, 140 characters or 300-word blogs aren’t always the most appropriate way to do this.

Architecting a Superior Customer Experience

Recently I led CMO Roundtable discussions with several CMOs in the Metropolitan D.C. area and Philadelphia to explore their roles in architecting the customer experience. In the Web 2.0 world, customer experience and loyalty have become the key differentiators between leaders and laggards.  While the importance of delivering great experiences for customers is generally understood by most companies, executing well (and consistently) across all customer touch points is a challenge for most.

This topic spurred a lively dialogue about the expanding role and responsibilities of marketing in an increasingly digital world.  Marketing is now expected to drive more of the customer experience to help support customer acquisition, expansion, loyalty and retention goals.  As one CMO put it:  “I need to prescribe the ideal customer experience at every touch point – Web, call center, product, store, etc. – regardless of reporting structure.  I’m providing guidance on how to drive a better customer experience so our company can optimize every interaction and drive positive word-of-mouth momentum.”  This new dictate applies equally well to B2B and B2C marketers.

Another key takeaway was that companies are striving for greater integration in customer management across functions and systems.   The CMO is naturally one of the primary executives that companies are turning to so they can orchestrate this cross-functional, strategic initiative to enhance customer lifetime value and operational efficiencies across sales, marketing, service and support.   Without appropriate department, process, and systems linkage, execution suffers.

While this approach is new to many companies, there are a number of world-class organizations already leveraging Pega’s software for customer centricity approach in their operations to help drive increased revenues while hiking productivity.  Whether it’s with insurance claims, corporate banking, or resolving healthcare claims, these leading-edge companies are making themselves more agile and successful. They are also rapidly realizing time to value and streamlining operations – with their customers top of mind.

We’ve driven a myriad of business benefits including:

The good news for CMOs is that with proliferation of technologies that support optimizing the customer experience to drive increased loyalty and lifetime value, there’s never been a better time to lead the charge to a better performance with more predictability.   If you are involved in driving the customer experience, I’d love to hear from you.  If you have 5-10 minutes, I invite you to take our survey on architecting a superior customer experience.

The Customer is Truly King – A Look at Why Customer Obsession Needs to be Your Organization’s New Business Imperative

March 2, 2012 1 comment

In their classic book, “The Discipline of Market Leaders,” authors Michael Treacy and Fred Wiersema described three basic “value disciplines” that can create customer value and provide a competitive advantage: operational excellence, product leadership, and customer intimacy.  For a long time since the book’s publication in 1983, many companies successfully adopted a customer intimacy strategy by “continually shaping products and services tailored to specific customer needs.”

But in this Web/mobile/social-driven era of customer empowerment, a customer-focused approach alone is no longer adequate.   Those who don’t agree will find it increasingly harder to survive, never mind thrive.

In their February 1  article in the Financial Times, Kyle McNabb and Suresh Vittal observe that technology-fueled disruption has undermined prior approaches to customer focus:  “Old models of channel and product specific ‘command and control’ just don’t cut it. These anachronistic approaches, in which channel owners can’t see beyond the channel de jour and product owners build from the inside out, don’t set the organisation up for success in a customer-driven world. Customer obsessed marketers (must) rethink business structures, reward methods and organisational design.”

Due to this fundamental change in the balance of power which has shifted irretrievably to the customer, the authors propose that marketing should lead the company shift to becoming customer obsessed.   Marketing has traditionally led cross-functional strategies and tactics around the customer lifecycle, from contact to acquisition to cross-sell and retention.  But leading an organizational shift to customer obsession is a much bigger consideration than who leads the charge; it’s the new business imperative defining what all functions in a company should do about it, both from a philosophical and operational perspective.

Some companies understand the difference between these two perspectives and some don’t.  In his recent book “The Ultimate Question 2.0,” Fred Reichheld provides a wealth of examples of companies which confuse their profit obsession with customer obsession and don’t value the difference, and thus, become obsessed with profits, i.e., adopting “customer unfriendly” business practices to maximize profits (and produce what he calls “bad profits”) that over time can undermine customer loyalty.   By embracing both the philosophical approach (i.e. following the Golden Rule and treating customers how you’d like to be treated), and the operational perspective (i.e. continually adapting  business processes and practices to create and increase net promoters), companies such as American Express, Charles Schwab, Verizon and Farmers Insurance  have become truly customer obsessed and distanced themselves from the competition.  This chasm will only become larger over the next several years.

At the Forrester Customer Experience Forum last June, Jim Bush, EVP of World Service at American Express, delivered a keynote titled “A Relationship-driven Approach to Service” where he talked about how when he took over World Service he drove the company’s transformation of customer service into a customer-obsessed organization delivering extraordinary customer service, from a traditional call center previously focused on reducing average handling time and cutting costs.   To accomplish this goal, American Express adopted a holistic approach of “serving relationships, not transactions”.  There was both a philosophical shift to regarding customer service as a source of competitive advantage rather than being a cost center: “each moment of truth” or customer interaction became an opportunity to compete and improve service delivery.  Mr. Bush also flipped the traditional approach of 70% of a reps’ training on technical content to 70% dedicated to customer handling training, and the results have been extraordinary. Between 2006 and 2011, his group more than doubled their net promoter score, delivered a 20-25% increase in card member spend, lowered attrition by six-fold, and, despite not focusing on reducing expenses, decreased service costs by 10%.  Those achievements are even more impressive when you consider the size and scale of American Express – which boasted $25.6 Billion in revenue for FY 2010.

In his October 3, 2011 research note, “CMOs Must Lead The Customer-Obsessed Revolution,” Forrester analyst Chris Stutzman writes that in “the age of the customer, empowered customers are disrupting traditional sources of competitive advantage.”  In order to thrive in this new era, companies must abandon the outdated customer approach where “workgroups focus solely on their view of the customer to develop silo-based strategies” and replace with a customer obsessed approach where “the customer’s needs permeate the company’s culture and operations facilitating the sharing of customer insights across the enterprise to develop cross-discipline strategy.”  It’s clear that the most successful companies today, and in the future, will fully embrace the philosophy and practice of customer obsession. They are not satisfied by merely focusing on the customer, but relentlessly adapting their customer engagement strategies, investment priorities, business processes and policies to ensure that they create more net promoters and engender fewer detractors.   Before Web 2.0 and the power of social media and mobile channel proliferation, traditional customer focus approaches may have worked.  But today, any company that fails to adapt their business process to serve the customer specifically how they demand to be served will likely suffer the consequences.  The smart companies have figured this out and are busy creating competitive distance.

Meanwhile, those in denial of this new customer reality are falling behind faster than they can run the numbers. By the time they realize just how bad things are, their customers will have already defected in droves.

Memo to Super Bowl Advertisers: It’s Time to Draw up Some New Plays

February 7, 2012 Leave a comment

Good communications succeed by connecting with the audience. Whether you’re talking about a business-to-consumer organization or an enterprise software company, it became clear that not all ad agencies and their clients subscribe to this mandate as I watched wide range of ads airing during the Super Bowl on Sunday.

While the game kept viewers on the edge of their seats up until the very end when the New York Giants won, the same cannot be said about most of the commercials. Far too often, it felt like advertisers were trying to do too much just to be different and forgot that you also need to connect to consumers and get them to actually want to do something about your ad, not just be entertained. In most cases, they dropped the ball more than some Patriots receivers!

Sure, there were a handful of exceptions – including the Coca Cola polar bears, Clint Eastwood’s heartfelt monologue in a lengthy Chrysler commercial, a dog bribing his owner with Doritos to keep mum about a missing cat, and Ferris Bueller skipping work to drive around a new Honda CRV.  But I am no closer to buying briefs donning David Beckham’s name now than I was before the game. I won’t be downloading TaxACT anytime soon, and I won’t be visiting GoDaddy.com in the foreseeable future (nor should I expect the entire female population to, either).

Considering advertisers paid $3.5 million for 30 seconds in front of 111 million or more viewers, I can understand the need to stand out, and let’s face it, sometimes missteps draw as much attention here too. But what exactly determines success for these ads?

One measure I use as a barometer for effective communications, especially advertisements of this nature, is whether they are both relevant and distinct.  In such high profile, expensive to produce spots, a lot of the commercials will be distinct, demonstrating creativity, edginess and inspiring the sense of seeing it for first time.  But as we saw too often, it’s much harder to be relevant.  You need to push forward a clear, concise message to viewers who are paying just as much attention to their buffalo wings and beer. And you have to make it actionable.  In other words, make them want to go out and shop for your car, beverage or snack food.  Or at least spark a desire to find out more your product or services – not just a colorful ad – when they are considering the category of product you represent. It’s on this very front that brands fall short far too often.

For example, Jet Blue had what appeared to be a fairly low cost to produce ad about a new employee being squeezed into a cubicle with two others and expected to actually get to work.  Everyone who flies could relate to the concept and so its relevance score for me was 100.

Sure, I may remember some of the awful ads for a while because they were distinct.  But I’ll do something about the ads that were also relevant to me.  Fortunately, my job at Pega is not causing a lot of sleepless nights, but if it were, I’d be sure to check out careerbuilder.com, whose monkey themed ads stood out again and showed they understand what’s on the minds of dissatisfied job seekers everywhere.

It’s Time to Make Marketing Dollars Work Smarter

January 18, 2012 1 comment

As we embark on another year with an uncertain and fragile economy looming, one thing is certain: most marketers are wasting money.  In the Web 2.0 world, and given the measurability of all things digital, at least it’s not as bad as the old lament:  “I know half of my money is wasted; I just don’t know which half.”  Nevertheless, many heads of marketing, especially at companies with broad product portfolios, are suffering from being far too egalitarian in how they allocate budgets by treating all budget centers and customer or prospect opportunities more or less equally.

But all customers are not created equal. Your best customers buy more of your products, are more loyal, less price sensitive and willing to recommend you more often to others.  So why are we not dramatically tipping the balance to the “20” in the “80/20” rule that can not only generate more revenue per invested dollar, but also more profit?

The main reason is the curse of entitlements and how established businesses generally approach the budgeting process by assuming that the prior year’s budget is the baseline – wherein each department or budget manager is entitled to some increase over the previous year.   This old-fashioned type of thinking typically leads to incremental vs. extraordinary improvement, and reinforces a “business as usual” vs. a “break from the pack” mentality, not only in terms of how budgets are allocated, but also regarding what market share gains are actually possible.   Geoffrey Moore addresses this level of stasis in his new book, “Escape Velocity: Free Your Company’s Future from the Pull of the Past”.  He says: “When organizations begin their strategic planning effort by circulating last year’s operating plan, they reinforce the inertial properties of the resources as currently allocated.”  To break away from the pack, Moore argues, companies need to be laser-focused on what they invest in and concentrate the maximum resources on strategies and investments that can create separation from the competition.

If one accepts the notion that all investments will not have the same impact and return, it’s not a big leap to realize that all customers and prospects should not receive equal shares of a budget.  The target segments and existing customers that have the highest revenue and profit potential should receive a disproportionately larger share of the marketing budget. One of the more important contributions to this type of non-traditional thinking is V. Kumar’s book, “Managing Customers for Profit”.  The quote from David Aaker on the back cover sums up Kumar’s approach best: “This book shows how a focus on Customer Lifetime Value (CLV) can change management toward long-term results by providing a fresh perspective on customer targeting, retention, and loyalty…it shows you the way toward strategic customer thinking.”

One of the key concepts that Kumar brings to light is how to transition from a product centric to a customer centric approach to marketing.  Rather than “peanut butter” the marketing budget across products equally, Kumar demonstrates how to target customers with higher profit potential and how to manage and reward existing customers based on profitability.   Kumar’s approach is also more holistic than many traditional methods that merely focus on lead generation and customer acquisition, in that he views customer value across a continuum, or lifecycle, prescribing a range of tactics for marketing resource allocation to optimize acquisition, growth and retention of a company’s most valued customers.

So, what’s this mean to you? If you haven’t already established your 2012 marketing budget and parsed out the allocations in a traditional fashion, where everyone gets their fair share approach, then consider a more radical or zero-based budgeting approach that can foster greater marketing efficiency and increased revenues and profitability.  If you are already locked in to the old way of doing things, who says it’s too late to shake thing up a little?  Marketers need to be agents of change, and there’s no better time to drive change than in the New Year.

Good Customer Service: You Either Get It or You Don’t

November 21, 2011 Leave a comment

It seems the chasm between good and bad customer service is growing wider every day.  There are many reasons why this is happening.  First, social media has empowered the consumer to not only voice her opinion, but also to create a rapid shift in positive or negative sentiment towards companies. Second, the combination of increasing global competition and a stagnant economy is forcing companies to reduce expenses, and often they decide to cut costs by targeting front-line employees who have direct impact on the quality of service delivery.  Over the past year, I, like many of my colleagues, have personally experienced the extremes more often than not.

On the good side of service delivery, I can find no better example than American Express.  I recently discovered that over the past 18 months AmEx had not been accruing rewards points on my credit card.  I called customer service and was told they’d research it and get back to me in 24 hours.  Later that day, I retrieved my voicemail to hear a message the service team saying: “Hi Mr. Johnson, this is Janet with American Express and we have looked into your account history.  It appears we inadvertently did not accrue points for you since early 2010.  We have deposited the 23,010 points into your account, and I’ve added another 2,500 for the inconvenience this may have caused you.”  Well, I’ve been loyal to Amex for more than 20 years and the stellar way this was handled (i.e. exceeding expectations in response time and action) only increased my satisfaction level.

Another shining example of good customer service comes from USAA.  Tired of sifting through competing credit card offers online, a colleague called and bluntly asked a CSR, “Which USAA-branded credit card offers the best cash back option, and can you tell me what the right card is for me based on my spending habits?”  Minutes later, the CSR not only told him the cash rewards Platinum Visa was best for accumulating cash rewards, but was also able to tell him how much he spent last year on each of his USAA cards.  Then, she noted how much he would have earned, had he used the cash reward card (and tastefully noted the low interest rate).  He’s used that credit card for the vast majority of purchases ever since.

On the bad side of service delivery is American Airlines.  I booked award travel in January and decided to redeem extra reward miles so my family of five could travel first class (which would be a first for my three kids) on a cross-country trip.  A few weeks ago, I received an email alerting me to a time change for the flight, so I checked the itinerary online and discovered, much to my chagrin, that all the tickets had been changed to coach seats.  I’ve flown over 1,000,000 miles on American and have lifetime Gold status, so when I call the service desk to get an explanation, I’m thinking this is an easy fix.  Not so. They simply say first class is not available anymore.  I say “fine, then deposit 125,000 miles back into my AAdvantage account, since I used 50,000 per ticket, not 25,000, when making the reservation in January.”  “We can’t do that, Mr. Johnson, because the plan-ahead seats for coach are no longer available, so you have to use “anytime” miles, and it’s now 50,000 for coach.  “But you changed the flight time, causing me to lose not only the first-class seats, but the mileage difference.  It’s not a change I made. Why should I be penalized?  Of course plan-ahead seats are taken, it’s only two months until the flight, but I booked 10 months ago,” I respond.  “Sorry, there is nothing we can do,” is all they said.  I could go on, but clearly American is no longer concerned about keeping me a satisfied customer.

Another bad experience came when dealing with a home warranty from First American Home Warranty, which came attached with an existing home purchase.  Since it was not new construction, my colleague, like many other homeowners, wanted the policy to cover unforeseen and expensive repairs of a variety of household appliances, plumbing, etc.  Oddly, the company knew the contract was about to expire one year from the home purchase date, yet it waited until one month after it had expired to solicit my renewal.  An entry-level customer service rep called repeatedly, using borderline scare tactics and poorly scripted messages to pitch me.  Since it knew the contract expiration date from the start, the company could have made proactive contact one or two months prior to the end date, versus sending vanilla form letters saying only, “Your contract is about to expire.” And the renewal would have been routine.  Taking this reactive tact compelled my associate to refuse renewal, and tell this story about a bad service experience.

An informal survey of several colleagues drew quick responses of good customer service and bad; however the bad ones are more salient and tend to linger in our memories.  My advice for companies looking to retain and grow their customer franchise is to work on fixing the processes, systems and training (or lack thereof) that leads to bad customer service, so more of their customers experience good customer service, and then recommend that business to their friends, and so on.