The Future of Marketing and Customer Engagement – Introducing the Emerging and Rapidly Growing Practice of the Customer Defined Experience

Did you ever consider the following questions related to the future of marketing and customer engagement?:

  • What are the levels of progression of an organization’s customer engagement and marketing capabilities – from the most basic to advanced?

  • What percentage of companies fall into each customer engagement & marketing capability level?

  • What is beyond the current advanced level of customer engagement and marketing capability and the wave of the future?

  • How do you simultaneously and significantly reduce the overall cost of customer engagement and marketing delivery while also significantly increasing your overall customer engagement and marketing effectiveness?

  • What does the future look like in terms of increased customer engagement and marketing ROI?

  • What is the most effective method for creating maximized customer engagement?

If you did, then this blog is for you as it succinctly answers these questions and more.

Future Leading Practice: The Customer Defined Experience
Future Leading Practice: The Customer Defined Experience

The above chart depicts the 3 primary & existing levels of customer engagement sophistication as well as the wave of the future which is The “Customer Defined Experience”. These four (4)  levels of organizational customer engagement capability are as follows:

1) Level 1 – “Shotgun Customer Experience”, very unsophisticated, yet inexpensive. Practiced by approximately 25% of companies.

2) Level 2 – “Segmented Customer Experience”, somewhat sophisticated and moderately expensive. Practiced by a majority of companies, approximately 70%.

3) Level 3 – “1-to-1 Customer Experience”, very sophisticated & expensive, Practiced by <5% of companies.

4) Level 4 – “Customer Defined Experience  which is an emerging leading practice, only practiced by <01% of companies, but the number of companies that are moving toward this capability level is growing fast. I am predicting that this will be, by far, the most effective method in terms of both ROI and cost effectiveness.

The Customer Defined Experience, Marketing Illustration

The Customer Defined Experience Using Marketing as an Example

We will now isolate marketing as a functional example (vs. customer service, sales, etc.) to illustrate how the customer defined experience will be different than traditional marketing practices. The above chart depicts the traditional levels of marketing sophistication and the expected ROI of each level. The newest trend in marketing and customer experience is also revealed in future level called “Customer Defined Experience, Marketing”. Each level consists of the following marketing practices:

  • Level 1: Primary focus on “Shotgun” marketing (approximately 25% of companies). In this approach, companies  send the same offer to as many people as possible with the hope that some of them might take the offer being put forth. With this practice, companies send the same offer to customers and prospects, regardless of their unique interests, needs, wants, history, etc.

  • Level 2: Primary focus on “Segment Marketing” (approximately 70% of companies). This approach models the behavior and history of customers in order to group them into unique ‘tagged’ needs groups. They are then sent offers that appeal to that distinct segment group.

  • Level 3: Primary focus on “1-to-1 marketing” (<5% of companies). This approach combines sophisticated modeling techniques and artificial intelligence to ascertain the unique needs of each customer or micro-segments (depending on the level of marketing technology sophistication, pure 1-to-1 marketing might not be able to be achieved). Companies that use this level of sophistication are few and we can point to major credit card companies, Amazon, Google as models utilizing this type of approach.

  • Level 4: Future Emerging Practice “User Defined Marketing”. (<.01% of companies, but growing fast) Companies like Bank of America, Wells Fargo, Marriott and Southwest Airlines are headed in this direction with the increasing querying of their customers on preferences, needs, wants, likes, etc. The extension of this is to allow customers to define their own experience – how/when they would like to be marketed to, by which channel, which content/tone they prefer, etc. As evidenced by increasing numbers of customer insights groups, this is the trend of the future. Instead of expending all of the effort in modeling/AI/etc. to attain 1-to-1 marketing which attains a 80+% match, why not ask your customers what they want/prefer which will ensure a 100% match to their needs nearly 100% of the time? Research I have conducted has indicated that 72% of customers want a more interactive ‘relationship’ with the companies they do business with, including defining their own customer-company experience – across all of their company touch-points: sales, marketing, customer service, warranty claims, etc. More on this point later in this article.

 

Customer Defined Experience, Marketing Example

Customer Defined Experience, Marketing Example

The above chart is arranged by the levels of marketing sophistication across the top with the following categories arranged on the left for each marketing level:

  • Primary Marketing Focus – What marketing activity do organizations at this level of capability primarily focus their efforts?

  • Marketing Proactivity, Analysis Main Focus: For each level of marketing capability, how proactive is the marketing organization and what is the major focus of their marketing analysis?

  • Primary Marketing Technology Enabler: For each level of marketing capability, what are the primary technology enablers in order for them to achieve their marketing goals?

  • Main Marketing Metric: For each level of marketing capability, what are the most important marketing metrics?

  • Expected Marketing Approach ROI: For each level of marketing capability, what is the expected ROI and return on marketing for following this approach.

Level 1 Capability -Shotgun Marketing

Level 1 Capability – Shotgun Marketing

Shotgun Marketing Practices

Shotgun Marketing Practices

 

Let’s examine the first level of marketing capability, that being Shotgun Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus for these organizations is to expand their pool of those who will receive their marketing promotions so that there will be likely someone in the mix who will be interested and respond to their canned & generic offer. I heard a comment from a marketing organization I worked for whereby the general manager (overall leader) of the business actually said to me – “just widen the list and I don’t care if Mickey Mouse is on the list, as long as we have 1,000,000’s of folks to send our e-mail to.”

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level is generally a reactive,  whereby the main focus is post campaign execution analysis and ‘seeing how we did in terms of number of responses they had to their offer(s)’.

Primary Marketing Technology Enabler: As you would expect at this level of marketing capability, technology  is generally very basic, rudimentary and inexpensive and would typically include simple and flat file (i.e. Comma Separated Value (.CSV) files) list generation using MS Access or Excel for list generation and very similar and simple spreadsheet type tools for post campaign analysis.

Main Marketing Metric: Since the focus noted above is reactive and post campaign focused, the main metric almost obsessed on by organizations at this marketing capability level is response rates (vs. true sales lead creation rates and actual conversion rates).

Bottom Line with Shotgun marketing organizations: With approach you save $$ by relying on very unsophisticated marketing personnel, processes, technology but this approach rarely produces a high marketing ROI with response rates generally in the 1-2% range due to the inherent high outbound volume. This approach also annoys customers and marketing recipients with mostly irrelevant offerings, products, services, etc., customer risking opt-outs, complaints, ignoring any/all offers by customers/prospects from the same (annoying) company, etc.

Level 2: Segment Marketing
Level 2 Capability: Segment Marketing
Segment Marketing Practices

Segment Marketing Practices

The 2nd level of marketing capability, is Segment Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus for these organizations is to ensure that the right marketing and sales offers are deployed against the appropriate segment group in order to ensure a marketing lift vs. shotgun marketing practices. An example of this is sending the frugal buyer segment offers for saving $$ by buying quantity of product or by sending offers for products that are discounted (i.e about to be discontinued products) vs. full price products.

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level is generally what I call a ‘retrospective plus’ organization whereby the main focus is post campaign execution analysis and determining the quantitative results (response metrics, plus  perhaps ROI metrics) PLUS the main root cause analysis as to why the campaign yielded in these quantitative results.

Primary Marketing Technology Enabler: At this level of marketing capability, technology in use is fairly sophisticated such as using SAS for building segment models and customer deciles and tools for campaign execution like Salesforce.com and post campaign analysis tools like Adobe and Tableau.

Main Marketing Metric: Since the focus noted above is quasi-reactive and post campaign, the main metric  obsessed on by organizations is overall campaign and segment level response rates as well as ROI if the organization has built a direct response attribution model for campaigns (matching campaign responses to actual customer purchases).

Bottom Line with Segment marketing organizations: By utilizing this approach you spend more $$ by relying on somewhat sophisticated marketing personnel, processes and technology.  This  approach also produces a higher marketing ROI than basic shotgun marketing with response rates generally greater than the 3% range. This approach also ensures segments and marketing recipients within those segments are receiving mostly relevant offerings, products, services, etc. in respect to their needs, wants, preferences, etc.

Level 3 Capability: 1-to-1 Marketing
Level 3 Capability: 1-to-1 Marketing

1-to-1 Marketing Practices

The 3rd level of marketing capability is 1-to-1 Marketing. These organizations have the following organizational characteristics:

Primary Marketing Focus: This strategy strives to ensure that the right marketing and sales offers are deployed against the appropriate individual customer (vs. segment groups)  in order to ensure additional marketing lift vs. segment marketing practices. An example of this is recommending a product that uniquely suits and individual customer’s needs when they are your website for another reason (customer service, billing, warranty claim, etc.).

Marketing Proactivity, Analysis Main Focus: The label is place on organizations at this capability level is generally what I call a ‘proactive predictive’ organization whereby they are recommending items to customers in real-time based on their specific needs profile. The analysis focus of this type of organization is real-time algorithmic learning by analyzing the effect of the real-time offers and then adapting algorithms to further refine the offer (e.g. slightly different product, slightly different price, better warranty coverage, etc.)

Primary Marketing Technology Enabler:  The technology in use for 1-to-1 marketing is very sophisticated and correspondingly expensive.  The goal is to use artificial intelligence for building individual customer profiles based on observed customer behavior.  Automated response engines are then used for real-time customer interactions and offer generation as well as ‘adaptive learning’ algorithms based on offer acceptance/rejection.

Main Marketing Metric: Since the focus noted in 1-to-1 marketing is proactive and real-time, the main metric is customer longitudinal behavior and associated key metrics like lifetime value, loyalty rates, etc.

Bottom Line with 1-to-1 marketing organizations: With this approach you spend a great deal more $$ up-front by relying on very sophisticated artificial intelligence with automated customer analytics and offer engine technology.  This approach does produce a much higher marketing ROI than segment marketing with response rates conservatively greater than the 8-10+% range.  This approach also ensures customers and marketing recipients are receiving extremely relevant offerings, products, services, etc. in respect to their needs, wants, preferences, etc.

Level 4 Capability: Customer Defined Marketing

Level 4 Capability: Customer Defined Marketing

Customer Defined Marketing Practices

Customer Defined Marketing Practices

The 4th level of marketing capability is The Customer Defined Marketing (& Experience). These organizations have the following organizational characteristics:

Primary Marketing Focus: The primary focus here is to ensure, for those customers who are willing to co-define their own experience with your company and brands, that there is an opt-in conduit whereby customers can self-define what type of marketing and customer experience they will have across all touch-points. Examples of this is allowing customers to define, through their own personalized ‘preference portals’, customer experience parameters such as the following:

1) Their tolerable periodicity of how often they want to be marketed to;

2) Selecting the channels they prefer for marketing, customer service, product recalls, etc. ;

3) Preferred time of day, week that they would like to receive marketing, communications;

4) When it is warranted to override their current opt-out settings (i.e. critical product defects notifications).

5) The specific types of content customers are interested in subscribing to;

6) The types of offers customers would like to receive – closeouts, higher end products, types of products/services, etc.;

7) …Many more customer defined parameters.

By enabling these customer-defined preferences above, you are approaching 100% in terms of ensuring the customer receives the right offer, by the right channel, at the right time, etc.

Marketing Proactivity, Analysis Main Focus: The main orientation and focus for organizations at this level of (future) capability is generally what I call a ‘proactive, holistic, continuous’ organization whereby the company is continuously seeking to deliver the desired customer experience with the goal from each customer is rating the company as being rated as extremely open, engaging, encouraging proactive listening, is a good and reliable brand partner, drives high levels of customer satisfaction, etc.

Primary Marketing Technology Enablers: With this level of marketing capability, the technology is not as sophisticated (or expensive) as in 1-to-1 marketing, but requires a paradigm shift back to aligning with the basic premise that the customer is always right and enabling customers to self-define their preferred marketing and overall customer experience through preference portals (enabling the self-defined experience) and through business process rule workflow engines like Pega Systems to deliver the customer defined experience.

Main Marketing Metric: Since the organizational orientation as noted above is proactive and continuous, the main metric almost obsessed on by organizations at this marketing capability level will be ongoing levels of customer engagement, satisfaction and loyalty.

Bottom Line with Customer Defined Marketing (& Experience) organizations: With this approach you spend less $$ by relying on sophisticated marketing personnel, processes, and technology.  The strategy  is expected to produce a much higher marketing ROI than all other marketing capability levels by enabling the customer defined experience and inherently having 100% accuracy rate (customer defined needs/preference = delivered customer marketing/experience).  This approach also ensures customers and marketing recipients are receiving TOTALLY (self-defined)  relevant and preferred offerings, products, services, and communications.

In implementing this solution, companies will have to take into account the following considerations:

1) Not all customers will want to opt into defining their own experience. By using lucrative opt-in incentives companies have been able to achieve nearly 70% participation rates by customers. The remaining customers can be managed by simultaneously utilizing any of the two previous capability levels of segment marketing and/or 1-to-1 side-by-side with customer defined marketing.

2) Delivering a unique customer experience, once defined, will be difficult. By utilizing automated work-flow and business rules engines in conjunction with marketing automation and service automation tools, pathways (e.g. customer use cases) can be set up to automatically deliver the desired customer experience for sets of customers with the same defined preferences.

3) The customer really doesn’t know what they want. I constantly hear  from business leaders and CxOs that the customer doesn’t really know what they want/need so why waste the time and expense to ask them. These are the same executives who are shocked when I provide customer insights or focus group feedback that consistently and totally contradicts their own perception of how the customer perceives their company and brand(s). I applaud the business leader brave enough to ask for these insights since the majority of business leader tout their great pulse on their customer base to internal stakeholders without ever validating these claims with actual customers. In addition, customers today are extremely savvy, sophisticated and aware and want to be in control of their own company/brand experience.

4) Customer won’t really spend the time to tell us what they need/want. A customer insights group I helped developed has 5,000 current members who are required to volunteer several hours a week providing a Tier 1 US bank with feedback on different pre-market launch products, services and approaches. There are another several thousand on a waiting list waiting to join this insights group to volunteer several hours a week to provide company/brand insights. Additionally, the loyalty level of this insights group toward the bank is 57% higher than non-members with members providing verbatim feedback on their participation in the insights group as follows:

1) “Finally a bank that listens to its customers”

2) “We consider bank {xyz} to be a great brand partner”

3) “{xyz} bank totally breaks the paradigm of most ivory tower banks just throwing products at you to buy, they actually care about our opinions and listen to us”

4) “They actually give us feedback on how our suggestions are shaping their future products and services – WOW!”

Therefore, the bottom line is that customers today are very eager to become a brand-partner provided you ask them, allow their direct company-brand participation.

Expected Marketing ROI Per Capability Level
Expected Marketing ROI Per Capability Level

The above graphic points to the fact that, with every increase in marketing sophistication and accuracy in providing your customers and prospects what they need/prefer, the increase in ROI also rises dramatically. The holy grail of this is the practice of Customer Defined Marketing and the abandonment of the expense and exercise of hypothesis building and refinement (iteratively guessing at what your customers want/need) and simply providing a conduit in order that your customers tell you precisely what they want/need/prefer. My research has shown that over 70% of a typical sophisticated customer base is more than willing to tell you what they want/need from your company.

Join the ranks of market leader like Wells Fargo, Marriott, Southwest Airlines, Ritz-Carlton, Bank of America and many more joining the customer defined experience future who query their customers on their wants, needs, preferences, likes/dislikes, etc.

Therefore, instead of your company spending a great deal of $$ on ever more sophisticated hypothesis building (intelligent guessing) what your customers want and prefer, just simply ask them and join the ranks of these market leaders that are participating in the emerging practice of the future – the customer defined experience.

Aligning Market Insights & Trends to Customer Strategies & Priorities

Does Your Company Ever Grapple with how to answer the Following Questions related to the market you operate in and your customers?:

  1. What is the size of the potential pool of new customers and which are the best customers to acquire?

  2. Which customers are your most profitable and how do you get other customers to grow and become part of your top ( and most profitable) customer segment group?

  3. What is your current customer share of wallet (SOW) as compared to your competitors and what does driving small incremental increases in your customer SOW do to your overall revenue?

  4. What are the shifting attitudinal and behavior patterns of your customer market and how do you develop a strategy that ‘gets in front of’ these trends?

  5. What are the shifting customer demographics of your marketplace as well as the underlying shift in spending habits

  6. What are the changes in customer preferred marketing channels as well as trends that might impact customer loyalty strategy

Market Insights and Trends Drive Customer Strategy, Programs

Market Insights and Trends Drive Customer Strategy, Programs

 

The above charts illustrate why it is critically important to have clear and accurate insights into your new customer market potential/pool as well as the current customer base and their share of wallet.

The chart above (left side) details the trends for new customers by segment as compared to current customers.

The chart above (right side) illustrates which customers drive the current percentage of revenue in order to understand how customer priorities and strategy should be defined.

Critical Insights: Top Customer, Top Profitable Customers and Customer Share of Wallet vs. Competitors

Critical Insights: Top Customer, Top Profitable Customers and Customer Share of Wallet vs. Competitors

Market Spend Insights Can Be Transformational in term of goal setting

The above graphic illustrates how share of wallet changes drive bottom line revenue as well as converting customers into more loyal top customers.

Customer Attitudinal Trends Insights Are Critical to Customer Strategy

Customer Attitudinal Trends Insights Are Critical to Customer Strategy

Understanding your market & customer behavior insights is crucial to your company’s survival

The above graphic demonstrates a deep understanding in the shifting attitudinal and behavior patterns of the customer market

Customer Market Buying Power Insights are Crucial For Developing a Coherent Customer Strategy

Customer Market Buying Power Insights are Crucial For Developing a Coherent Customer Strategy

The above chart illustrates a company capability to understand shifting demographics as well as the underlining shift in spending habits per demographic group

Understanding Key Customer Behavior & Preferences is a Customer Strategy Imperrative

Understanding Key Customer Behavior & Preferences is a Customer Strategy Imperrative

The above chart illustrates a company capability to understand the changes in marketing channels as well as trends that might impact customer loyalty strategy

Customer Strategy: An Alignment of All Customer & Market Insights to Maximize Market Dominance & Profitability

Customer Strategy: An Alignment of All Customer & Market Insights to Maximize Market Dominance & Profitability

Once Customer and Market Insights are fully embraced, an Effective Customer Strategy can be developed that includes optimizing market channel selection, as well as contact and loyalty strategy program components

Blog Summary: In order to achieve the above insights, your company must develop and deploy the following strategic capabilities and delivery programs:

  1. Market sizing & trend insights

  2. Customer revenue and profitability insights analysis

  3. Customer share of wallet and competitor spend insights delivery capability

  4. Market trend & consumer attitudinal and behavior change longitudinal analysis

  5. 360° customer needs and preference cultivation that enables a personalized customer experience strategy and delivery (i.e. preference portal customer selection of preferred channels, content types, offer types, frequency of content delivery by content type.)

Below is a list of companies where I have helped develop these programs and are considered world-class in these practices:

  • Johnson & Johnson

  • Capital One

  • Amazon

  • American Express

  • Kelloggs

Customer Emotions that Drive Buying Behavior

Find out why most companies miss the mark in terms of focusing on generating positive customer emotions

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Solutions to Problems AND Good Customer Emotions Need to Exist for Long-Term Loyalty

Good products and services are only part of the equation in terms of generating customer repeat business, loyalty, long-term retention

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Some Customers Will Work to Destroy Your Business While Others Are Willing Partners in Helping You Grow, Be More Successful

Some customers will actually work to kill your company and brand(s), namely dissenters and defectors, while others will work tirelessly to bolster your sales, reputation, customer acquisition efforts, etc.

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Guidelines for Generating Positive Customer Emotions and Relations

It is essential that all of your customer facing team members are representing the company and brand well, and that they adhere to your stated customer principles

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Sample Steps to Developing an Environment Where Customers Are Motivated to Buy from Your Company

Your customer facing team members need to develop a customer interaction playbook that is consistent with your brand and customer mantra

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Alignment of the customer delivery ‘value chain’ is Crucial

Every aspect of your customer delivery ‘value chain’ needs to be synchronized to deliver a highly consistent and high quality (emotional) experience as rated by your customers

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A Chief Customer Officer’s (CCO) role is to Advocate for the Customer within the CxO suite

** Refer to previous blog article on the 5 R’s of customer loyalty – https://goo.gl/L4IA3q

If you rate customer satisfaction and loyalty as a high company priority, then they must be represented by a Chief Customer Officer (CCO) that will truly advocate for customers and set the customer standards that drive positive customer emotions

Summary:  The following points summarize the content of this blog as follows:

  • In order to develop customer loyalty you must have both great products and services as well as the ability to generate positive customer emotions (customer delight, feeling connected to the company)

  • Segments of your customer base will work to destroy your attempt at market success while others are your partners in helping your company become even more successful.

  • In order to drive positive customer emotions and convert your customers into advocates and super-advocates, you must develop an internal customer relations playbook (develop customer vision, code of customer interaction conduct, etc.)

  • Every aspect of your customer delivery ‘value chain’ needs to be in-synch in order to deliver an end-to-end superb and fulfilling customer experience

  • Every company should have the equivalent of a Chief Customer Officer (CCO) in order to set the customer vision and standards and be the ultimate advocate for all of your customers.

Win a Customer for Life by Employing the 5 R’s of Customer Loyalty

 

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The 5 “R’s” of Customer Loyalty

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Ensure Your Company is 5 “R” Customer Compliant

Following the 5 R’s of Customer Loyalty Will Enable Your Company to Attract and Keep Customers for Life

 

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Ensure Your Company is Customer R-Reliable

 

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Top Steps to Ensuring Your Company is R-Reliable

The First “R” of Customer Loyalty Is Setting High Quality Customer Standards (External) and Goals (Internal) and then Delivering on that Customer Promise for Each and Every Customer Interaction as well as the overall & long-term customer relationship

 

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Example of How a Company Demonstrates Customer R-Reliability

 

 

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Example of How a Company Demonstrates Customer R-Reliability (continued)

 

 

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Ensure Your Company is Customer R-Responsive

 

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Top Steps for Your Company to Become Customer R-Responsive

 

The 2nd “R” of Customer Loyalty Is Ensuring That Customer’s Expectations Are Met: Needs, Concerns, Quality, Cycle Time Expectations, etc.

 

Example of How a Company Demonstrates Customer R-Responsiveness

Example of How a Company Demonstrates Customer R-Responsiveness

 

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Example of How a Company Demonstrates Customer R-Responsiveness (continued)

 

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Ensure Your Company is Customer R-Recognizable

 

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Top Steps for Your Company to Become Customer R-Recognizable

The 3rd “R” of Customer Loyalty Is Ensuring That Your Brand and Company has Distinctive and Positive Characteristics such that it drives positive emotions (driving repeat business, customer referrals, word-of-mouth adverting, etc. 

 

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Example of How a Company Becomes Customer R-Recognizable

 

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Example of How a Company Becomes Customer R-Recognizable (continued)

 

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Ensure Your Company is R-Relationship Oriented

 

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Top Steps for Your Company to Become Customer R-Relationship Oriented

The 4th “R” of Customer Loyalty Is Ensuring That Your Brand and Company develops a high quality and mutually beneficial relationship with your customers based on mutual respect, customer insights, an ongoing and open dialogue and a model that encourages a partnership between your brand & company and your customers 

 

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Example of How a Company Demonstrates That It Is Customer R-Relationship Oriented

 

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Example of How a Company Demonstrates That It Is Customer R-Relationship Oriented (continued)

 

 

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Ensure Your Company is Customer R-Rewarding

 

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Top Steps for Your Company to Become Customer R-Rewarding

The 5th “R” of Customer Loyalty Is Ensuring That Your Brand and Company rewards mutually beneficial customer behavior (greater share of wallet, spend, brand partnership activities, etc.) such that it drives further and longer-term customer loyalty.

 

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Example of How a Company Demonstrates Customer R-Rewarding

 

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Example of How a Company Demonstrates Customer R-Rewarding (continued)

 

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Is Your Company Ready to Take the 5 “R” Pledge?

SUMMARY: If you take the pledge above to adhere to the 5 R’s of customer loyalty, you will enhance your ability to attract and retain customers for life. Key to this is developing the capabilities to be best in class for each “R” and ensuring that you are (cost effectively) maintaining a major qualitative advantage in each customer R vs. your competitors.

The 80/20 Customer Profitability Rule

Develop intelligent customer service & customer management programs based on customer value insights…

Has your business ever performed an analysis of your customer base to determine any of the following:

1)      Which customers are frequent visitors and have the greatest repeat business?

2)      Which ones rarely do business with your company?

3)      Which ones are the most valuable and profitable to your company?

If you haven’t then you really don’t have the insights necessary to really develop an effective customer service, customer management and/or loyalty program.  In performing analytics and customer analysis for nearly 10% of the Fortune 500 companies in the United States, I have found a very revealing and astonishing pattern (rule) in this customer analysis that holds true company after company.  The pattern is as follows:

80% of all company profits are derived from ~20% of your customers

Take the chart below (Chart 1) from one of the top US banks that shows 20% of their customers are responsible for 82% of their profitability and that a full 47% of customers are actually unprofitable and not worth having as customer as each transaction costs the bank more than it is worth (each customer interaction/transaction actually drives the bank further away from profitability) {Click on Chart for a larger/clearer image}:

80% of all company profits are derived from ~20% of your customers

80% of all company profits are derived from ~20% of your customers

When I presented this customer profitability analysis to the bank, the bank executives were amazed at the results and of the customer profitability distribution. (Note – The deciles were developed using a SAS generated RFM analytics model whereby Recency (How recent customer have visited/purchased), Frequency (How frequently customers have visited/purchased and when they visited/purchased) and Monetary spend (How much they spend and on what types of products/services they spent their $$ on). The RFM model was then used as input into a profitability model, using actual profit data for each product/service/customer using a unique customer id to match the profit data to the RFM score.)Why are these insights and analytics so important and what might the bank or any other business do to manage customer relationships more effectively?  These insights are key in developing a customer relationship management (CRM) and loyalty program that is tailored and specific to each customer group. 

Note: The 80/20 rule applies to companies that have higher transaction volumes, a diverse set of product & services and a heterogeneous customer base.

Ask yourself the following questions:

  1. Should your company treat your best and most profitable customers differently than other, less profitable customers?
  2. Should your company develop special customer programs so that the 20% most profitable customers are not lured away by competitors?
  3. Do you think your company’s most profitable and valuable customers want to be shown appreciation for their repeat and profitable business in a way that makes them feel welcome and special?
  4. Is it in your company’s best interest to want to develop strategies and programs that turn unprofitable customers into profitable or at least revenue neutral customers?

The answer to all four questions should be a resounding YES!

Armed with the above insights and analysis a company can start to architect customer intimacy and loyalty programs such as the following:

  1. Offer most profitable customer special discounts or accelerated loyalty rewards earning rates
  2. Conduct special top customer, by invite only, appreciation events
  3. Deliver occasional special top customer gifts or recognition when they interact with you in-person or on-line
  4. Invite your top 1-5% of customers to participate in an invite only customer advisory board or insights group event every year at an exciting destination where most or all expenses are paid for by your company
  5. Develop unprofitable customer management programs such that these customers become more profitable, cost less per company transaction and/or they are effectively ‘encouraged’ to migrate to competitors.

Take the same chart above and now overlay customer treatment programs to each customer decile and sub-segment (Chart 2) {Click on Chart for a larger/clearer image}

Effective Customer Management Programs Based on Profitability Insights

Effective Customer Management Programs Based on Profitability Insights

Even though decile #1 (10% of all customers) has been identified as the most valuable customer segment generating 65% of all company profits, the decile can then be further sub-segmented based on further profitability analysis/decomposition.  In this particular case:

  1. The top 5% of the top profitability decile customers generated 42% of all profits
  2. The remaining 5% of the top profitability decile customers generated 23% of profits

As shown in the ‘golden’ box (#1) above and below, these top tier customers should be given special access and special attention and made to feel totally appreciated and a partner of the company. The golden box also demonstrates the types of special programs you might want to provide to this top profitability group. It is of your utmost importance to do everything in your company’s power not to lose these most valuable/profitable customers. These suggested treatments are just a sample, but ones I have developed for many clients in the past, including top tier banks, retailers, life sciences companies, telecommunications providers, etc. {Click on Chart for a larger/clearer image}:

Top 5% of Customers Receive Platinum Plus Customer Programs

Top 5% of Customers Receive Platinum Plus Customer Programs

The next (Green) group of profitable customers highlighted in box #2 (below) can receive special treatment as well, but not quite the golden treatment as the most profitable 5%. These next valuable set of customers would still receive top customer treatment, but not quite the platinum access that the most valuable 5% would receive. You wouldn’t want to lose these valuable customers either, so their treatment would still be special, memorable and differentiated vs. your competitors. {Click on Chart for a larger/clearer image}:

Next Top Set of Customers Receive Top Treatment, but not Special Access, Handling Like the top 5% (Platinum) Group

Next Top Set of Customers Receive Top Treatment, but not Special Access, Handling Like the top 5% (Platinum) Group

The blue box (#3) in the chart below speaks to customer migration programs that incentivize customers to spend more, visit your company (physical or online) more, purchase higher value items, buy in bundles, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Programs Effectively Transition Customers into More Valuable Customers Over Time

Effective Customer Management Programs Effectively Transition Customers into More Valuable Customers Over Time

One very effective way to do this is to develop what I call modeled incentives. In that, if a loyalty program is to be effective there should be an incentive for the customer to model the behavior to achieve the next loyalty reward level and the following must be present:

1)      Every customer group must know what they need to do to achieve the next loyalty rewards level

2)      Customers need to feel the next loyalty rewards level is significantly more valuable than their existing level

3)      There should be prestige and/or notoriety associated with achievement of the next loyalty rewards level so that customers feel privileged, special and differentiated from regular customers.

Lastly, the red box (#4) below speaks to customer management programs that need to either turn these unprofitable customers into profitable customers or find ways to reduce the cost to serve these unprofitable segments. Some strategies including limiting these customers to self-service, providing incentives to transact during off hours, incentivizing them to seek lower cost providers, etc. {Click on Chart for a larger/clearer image}:

Effective Customer Management Program Also Address Unprofitable Customers

Effective Customer Management Program Also Address Unprofitable Customers

The bottom line is that, through customer insights and analytics, you will find that not all customers are the same in terms of profitability (the 80/20 rule), therefore it makes no sense whatsoever to treat all customers the same. Through a robust customer insights program you will then be able to leverage these insights and develop a sophisticated and custom loyalty and retention program in order to accomplish the following:

  1. Develop break-away tier 1 (Platinum) loyalty programs that stand alone in the industry such that your top 1-5% most valuable customers would not even consider defecting to another provider
  2. Develop programs to retain your most profitable customers and make them want to remain a loyal customer
  3. Develop a loyalty migration path for customers to want to achieve the next loyalty rewards level (Silver, Gold, and Platinum) so that they simultaneously feel more recognized/special/connected to the company while providing your company great value/profits/monetary return.
  4. Develop programs to mitigate expenses when dealing with your least profitable customers (more self-service, helping them ‘discover’ lower cost competitors, offering more limited services, etc.) (the other 80%)

Blow Away Your Competition by Replacing Your Old CRM Program with the New Customer Relevant Relationship Management (CRRM) Model

Blow Away Your Competition by Replacing Your Old CRM Program with a more effective Customer Relevant Relationship Management (CRRM) Model

1)               Introduction

  1. Do you have a robust CRM program in-place, but you feel you are still missing the mark in terms of delivering what your customers really want & need?
  2. Is your organization at risk of making market decisions that can cause a backlash and mass defection by your customers like the Bank of America $5 fee decision or the Netflix business split decision?
  3. Do you have volumes of consumer data and analytics, but sales are declining or flat and customers are churning at an increasing rate?
  4. Do you feel you could improve the quantity and quality of your customer insights including ascertaining critical consumer needs, preferences, likes/dislikes, interests, preferred communication channel for you to contact them, preferred timing and frequency for you to communicate with them, etc?

If you can say “Yes” to any of these questions, the rest of this post is a MUST READ for you and it is time to consider this more effective CRRM Model to replace your outdated CRM Model.

2)               CRM vs. CRRM Model Overview

The following diagram depicts the major differences between the old CRM Model and the new CRRM Model including the problems associated with the old CRM model and benefits of the newer CRRM model.

Old CRM Model vs. Customer Relevant Relationship Management (CRRM)

Old CRM Model (left above):

  1. Relies on historical data and analytics to determine what customers need, want, etc. by the analysis of sales history, types of products purchased, categories of products purchased, views on websites, stores visited, etc.
  2. Customer activity information is a proxy to what customers really want and need. Example, you will seldom learn that a customer hates an in-store or web experience through this proxy for what they are wanting, feeling, needing, disliking, etc.
  3. Companies are unlikely to gain insights into the impact that any future company decisions will have on customer loyalty, retention, acquisition.

New CRRM Model (right above):

  1. Takes a more direct approach with customers and utilizes a systemic querying method to ascertain exactly what customer want/need/prefer/etc.
  2. Embraces customer councils, customer forums, customer voting to drive future content, interactions, product/service offerings, etc.
  3. Activity solicits ratings from customers on many aspects (marketing materials, web experience, in-store experience, product usability, quality of customer service, etc.) regarding the health of the overall customer relationship and continually asks “How well are we managing our relationship”

3)               Example of CRM Model Gaps

To illustrate how companies are struggling to really determine the real needs of their customers, I took selected comments from interactions with senior CRM executives from major US Corporations based on consulting engagements, job interviews, speaking to them in passing, etc. The following charts are their actual verbatim comments as well as my read on their CRM gap that prevents them from developing world-class relationships with their customers.

Traditional CRM Programs:

  1. Organizational culture, operations, and go-to-market strategy does not put the customer and real customer insights into the center of CRM operations
  2. Relies on data, analytics, and customer history to drive on-going customer interactions.
  3. Puts the organization at extreme risk of missing the boat from a customer’s perspective – real needs, wants, concerns, preferences, experiences, etc.
  4. Companies that rely on this model are at-risk of customer defections, decreased customer spend/loyalty, etc.

New CRRM Model – with Customers In The Center of Customer Operations

New CRRM Program:

  1. The organizational culture, operations, and go-to-market strategy puts the customer and real customer insights into the center of CRM operations rather than rely on the proxies of what customers want, i.e. data, analytics, and customer history.
  2. The customer becomes the actual judge, ‘rater’ of whether you are delivering quality, value and a good relationship to them.
  3. The customer is put in charge of CRM operations and enables a bi-directional and on-going dialog with the customer whereby they tell you their real needs, wants, concerns, preferences, experiences, etc.
  4. Companies that rely on this model are more likely to develop products, services, offers, communications that delight the customer and whereby they are more loyal, greater brand advocates, and likely to refer your company to their friends as a company who listens, cares and empowers their customers.

6)             Companies That ‘Get ‘CRRM

The following are samples of companies that, in my opinion, get the CRRM model and details how/why each of them get this new go-to-market customer model.

Companies That ‘Get’ CRRM – 1 of 2

Companies That Get CRRM – 2 of 2

Phrases That Describe Companies who ‘Get’ the New CRRM Model

  1. We don’t hide behind data and analytics to drive our customer & CRM operations, but rather we ask our customers what they want.
  2. We are eager to ask our most disgruntled customers how we can improve our relationship with them and to determine who to improve our go-to-market strategy
  3. Before we make any major market-facing decisions, we ask a cross-segment of our customers what they think about each of our proposed decisions and then ask them how to improve upon how these changes are implemented so we ensure a continued delighted customer base.

The bottom line of this post is that, if your company relies less on historical data and analytics to determine what customer want and actually builds methods, processes, and systems to put the customer in charge of rating CRM operations in order to provide you with ongoing and valuable real insights (needs, wants, likes dislikes, preferences, concerns, etc.), the customers will feel more valued and connected with your brands. The benefit of adopting this new CRRM model will be more loyal, empowered and delighted customers who will be brand advocates and brand referrers that will increase shareholder and company value.

As I have now built this new CRRM model for several major US brands, my next blog post will be on ‘how to’ develop this capability at the enterprise level.

Leveraging Enterprise Collaboration Platforms (ECPs – a.k.a. intra-social applications) to Increase Internal Collaboration, Productivity and Overall Company Performance

Part Two – Leveraging Enterprise Collaboration Platforms (ECPs – a.k.a. intra-social applications) to increase internal collaboration, productivity and overall company performance
 

In my previous blog, I covered the first of three mega-trends hitting the social media marketplace for large Fortune level organizations.  In this blog, I address how the use of enterprise social monitoring and intelligence platforms are helping companies leverage key insights from an array of market activity and major trends including competitor activity & weaknesses, key opinion leader sentiment/needs, regulator trends and concerns, political leader and influencer sentiment, public opinion and key issues. 

This second blog is dedicated to the second social media trend hitting corporate America that focuses on the Intra-Social Media Application or Enterprise Collaborative Platforms (ECPs). In the same format as my last blog, I will cover this subject as follows:

A) What is an ECP or intra-social application
B) What are the benefits from using an ECP
C) What are the hottest tools/applications in the marketplace
D) How do you implement an ECP capability 

A) What is an Enterprise Collaboration Platform (ECP) or Intra-Social Application?

An ECP is a social media application much like Facebook, but exists entirely behind the firewall and is designed to increase intra-corporate collaboration, decrease time to market, and enhance overall corporate productivity. In direct response to this fear of implementing a full bi-directional (conversational) social media program that might trigger a negative market reaction or a warning/fine from regulators (Life Sciences and Financial Services organizations), companies are investing heavily into this new intra-social application since it sits entirely behind the firewall and is virtually risk-free from a market faux-pas or fear of regulatory consequences (particularly true for Financial Service & Life Sciences Companies).  The following illustrates the key features and capabilities of a best-of-breed ECP or intra-social solution/platform:

Intra-Social Enterprise Collaboration Platform Key Features:
•  Social Networking at the Department Level (Intra-Social Networking)
•  Internal & Secure Social Communications System – Behind the Firewall
•  Intra-Social productivity enhancement environment including :
•  Internal Chat
•  Internal Meeting Coordination & Management
•  Internal video conferencing
•  Internal document management
•  Internal blogging, wikis, team profile (expertise) profiling and locating

Capabilities include:
•  Out-of-the-box social networking capabilities
•  Pre-integrated enterprise communications
•  Business Systems Integration
•  Content Management System Integration
•  Enterprise-grade security and policy management

B. What are the benefits – Why are companies and government agencies adopting social Intelligence capabilities?

The following list represents just a few of the benefits of implementing an ECP or intra-social application:

1) Optimized Team Building – Environment increases team visibility, sharing and collective insights, and collaborative/virtual project development

2) Increased Knowledge Sharing – Enables collaborative knowledge development and sharing near real-time

3) Integrates Communications and Business Processes – Integrates and accelerates the use of chat, video sharing, teleconferencing, blogging, video conferencing, etc.

4) Accelerated Team Performance – Facilitates real-time and interactive participation via the right team expertise

5) Fully Engages Teams and Departments – Encourages team interaction and inter-departmental cooperation on programs and projects

6) Increased Control over Intellectual and Digital Assets – Single/integrated environment for asset management

7) Accelerated Return on Existing Application Investments – Integrates and accelerates the value of existing IT investments by seamlessly integrating enterprise content management, unified communications and business management applications

‘8) ECPs allow companies to ‘cut their teeth’ on developing a social media capability without the risk of mistakes that would trigger a market or regulatory backlash. This social media indoctrination includes prototyping the following social media components:
1) Organizational Design
2) Policy and Standards
3) Process design & execution
4) Performance metrics & KPIs
5) Application standards
6) Support model and associated support structures

9) ECPs, when architected properly, can easily integrate with an external and fully bi-directional social media program

10) Companies who integrate and optimize ECPs with traditional market communications channels such as call center, web, mobile, e-mail, etc can benefit from a dramatic increase in the overall customer and stakeholder experience.

11) ECPs can dramatically increase the appetite for increased intra-organizational change and the appetite for innovation and entrepreneurialism. Complimentary to this is the need to support the implementation of an ECP with a heavy dose of change management as this implementation represents a new way of conducting business

12) The overall goal of the increased internal collaboration and productivity derived from the ECP is to decrease the time to market with products and services that have increased market relevance.

C) What are the hottest tools/applications on the ECP or Intra-Social Application market?

Almost all ECPs are relatively new to the marketplace and few software vendors have deployed to more than a several Fortune-500 level companies. 

Leading ECP Software Vendor & Tools:


* Cisco Systems – Quad. Cisco was well positioned for the intra-social market in that they had many of the existing components that are essential for a world-class ECP. Cisco already had many very capable collaboration applications such as the following:
a) Video teleconferencing and team conferencing
b) Instant chat features via their ‘Click-to-chat’ functionality
c) Instant meeting management via their ’click to meet’ functionality
d) Group management and profiling.

The Quad platform allowed them to effectively integrate these pre-existing capabilities with some additional ‘Facebook like’ features such as the following:
a) Community development and management,
b) Blogging and Wiki collaboration,
c) Team member or team activity broadcasting and management,
d) Team expertise profiling, etc. 

The integration of all of these components as well as the integration capabilities with existing corporate applications like document management, CRM system integration, social profiling for customer service and many other features brings Cisco to the forefront of ECP platform vendors and is well positioned to remain a leader in this space

* IBM – IBM Lotus Connections.  IBM was an early entrant into enterprise social tools, and this has enabled the IBM Lotus offering to remain in a leadership position.  IBM Lotus connections has many of the same features/functions as Cisco Quad such as Communities, file sharing, Wikis, team profiling, blogs, team activity tracking, home page activity and preference management, etc.  In addition to these features, the IBM offering has a Social Analytics function that facilitates the user on profiling those who might be good connections both on an individual level and community level. The IBM offering also provides mobile access to access the technology from a mobile device and also provides chat forums to share insights, ideas and concerns.

* Jive with Microsoft SharePoint & SharePoint Connector: Jive in conjunction with Microsoft SharePoint is a very powerful collaboration platform.  Jive is used as the hub for socializing and sharing content broadly across the enterprise. SharePoint can be used in conjunction with Jive with the SharePoint connector by integrating SharePoint with Jive, using SharePoint as the workflow and document storage system (what is was designed to be best at). Together, these two applications drive awareness of enterprise activities by socializing content and team activities, wherever it originates, to inform better business decisions.

* SalesForce.com – Chatter. Following on their success with their Sales application, Salesforce.com has developed a very robust intra-social ECP application called Chatter which allows all people within the company to interact and collaborate on projects. Many times the Sales Force of a company will be the first to adopt this technology due to the fact that the sales force is already using the sales application, hence is a good pilot group to pilot the intra-social application.  Similar to Cisco’s Chatter application, the features and functions are designed to maximize team interaction and collaboration so that teams can operate more efficiently by eliminating the need for many manual cycles to coordinate and conduct meetings, collaborate on documents and projects, and develop deep insights based on team specialization and expertise.

* Oracle  Beehive. Oracle Beehive is also a strong contender due to the size of the company, its existing installed base a relatively strong product line. Similar to many of the software vendors above, The Oracle Beehive product provides an integrated set of modular collaboration services including email, calendar, team workspaces, instant messaging, and conferencing.

Challenger ECP Software Vendor & Tools:

The companies below are considered challengers due to their smaller company size, relatively new entrance to the market place and/or their set of smaller customers that have their products currently installed.

* Atlassian Confluence: Atlassian’s confluence product is mostly seen as a productivity wiki tool, geared toward technology departments. However, the product is highly extensible with integrations into Microsoft SharePoint and Lotus Connections.  The product is also most geared toward content sharing, discovery, creation, etc.

* Novell – VibeCloud.  The company’s acquisition of SiteScape brought the company beyond email and calendaring and more into the collaboration space. Novell has many of the futures as some of the leaders above such as document management, social messaging, conversation tracking, group & community management, etc.

* PBworks – PB Works appears to be geared to mid-sized companies in providing collaboration Software for Smaller Advertising Agencies (PB Works Agency Edition), Legal Firm, Consulting, Medical, Associations.

* Socialtext: Socialtext was best known for bringing Twitter-like status functionality to the enterprise called “signals”.  Social text has many of the same features as the leaders above, but is a smaller sized company than an IBM or Cisco.  Socialtext also provides integration with Lotus Connections and Microsoft SharePoint.

* Traction Software: Traction software is highly focused on managing projects in that their own tagline is “Social Software meets Project Management” . Forrester lauds Traction for bringing blogs and wikis to the enterprise

D) How do you implement an ECP capability – what are the steps and considerations on implementing this capability within your organization and company

Social Media Implementation & Program success requires comprehensive visioning; with stepwise implementation, guided by a roadmap and integrated project plan.  I have developed this capability for several Fortune 500 companies and the capability can be enabled via three (3) Major steps as follows (Summarized):

1) Step #1: Develop a ECP and Intra-Strategy including the following:
a) ECP  Strategy/Vision, Objectives, Business Drivers, Critical Success Factors, Community/ Forum Listening Strategy, Key Metrics & Performance Plan, Organizational Plan, Change Management Plan, Communications & Risk Management Plan, monitoring policies, governance plan
b) Put together an implementation roadmap and a centralized PMO to manage the implementation of the roadmap/ECP vision
c) Form your intra-social strategy & vision with key stakeholders

2) Step #2: Social Media Technology Platform Evaluation & Selection
a) Identify potential ECP platform & community management vendors
b) Develop Needed ECP Requirements and Capabilities
c) Perform Technology Platform Vendor Selection
d) Onboard Vendor
e) Build a techno-functional architecture to support the roadmap

3) Step #3: Develop Social Media Program Pilots & Deployment Plan
   a) Develop Pilot Project & Deployment Plan
   b) Develop ECP management processes that provide organizational confidence and exercise process excellence transparency to solidify user/stakeholder buy-in and acceptance.
   c) Develop Technology Pilots
   d) Develop  Program Pilots
   e) Invest in Organizational change management to instill solid user/stakeholder adoption
   f) Develop Organization & Process Pilots
   g) Deploy Pilots and Programs including
      1.  Center of Excellence Deployment
      2.  Multi-Channel Integration
      3.  Policies/Processes
      4.  Roles, Rules, Responsibilities
      5.  Change Management, Change Management, Change Management

That last bullet point is not a typo as I would honestly say that the #1 main key to success in implementing this type of software is an extremely capable change management program. This type of software requires a behavior change on the part of your employees and management and it won’t come easily.   I can say this with confidence – If you are not considering a heavy dose of change management as part of this implementation, your implementation is most likely going to fail!

In summary, ECPs and intra-social applications are gaining a great deal of Momentum.  Many Fortune 500 companies are either planning to implement this capability or already have.  Is your organization planning on implementing this potentially game-changing capability? If so, give me a call, I call help you achieve world-class programs that enable you to surpass your competition and bring your organization or agency to the next level of market and intra-social collaboration capability.

Leveraging Social Listening Programs To Develop Market & Competitive Intelligence to Leapfrog Your Competition

Leveraging Social Media Capabilities and Applications to Develop Competitive Advantage – Three Current Social Media Mega-Trends
 
Part One – Leveraging Social Insights & Intelligence to formulate better decisions to gain market, competitive, political and social advantage

In keeping a very close eye on the trends on the rise in the marketplace on how companies and government agencies are leveraging new social media capabilities and technologies, there are several on my radar screen that are coming up over and over again and again.  These trends are evidenced by the numerous requests I am receiving in these topic areas in the form of responses to proposals and information, requests for ‘lunch and learns’, requests to speak on the topic, etc.

Some of the hottest trends in the social media space from a corporate or governmental agency perspective are as follows:

1) Leveraging of Social Media and ‘Social Intelligence’ as a component to developing overall competitive and Market Intelligence Insights & Capabilities
2) The use of Intra-Social Enterprise Collaborative Platforms (ECPs) to enhance organizational productivity, internal collaboration and decrease overall go-to-market cycle time
3) The use of Intra-Corporate Social Crowd Sourcing ‘Innovation Acceleration’ Applications & Capabilities

Over the course of the next three blog entries, I will cover each of these social media mega-trend areas in the following format:
A. What is it – Description of the functionality this capability enables
B. What are the benefits – Why are companies and government agencies adopting and using this capability and how are they benefitting from its use
C. The hottest tools/applications in the market for this capability – who is leading, lagging, emerging
D. How do you implement it – what are the steps and considerations on implementing this capability within your organization and company

There are several instances where the use of social media insights could have helped organizations be better prepared for market shifts, product issues & defects, crisis management, and better able to spot trends regarding regulation, key opinion leaders, competitors, and go-to-market issues (sales, marketing, customer service, warranty claims, etc.). In the rest of this blog I will cover the first topic/trend of “Leveraging of Social Media and ‘Social Intelligence’ as a component to developing overall competitive and Market Intelligence Insights & Capabilities”:

A. BP Gulf Oil Spill – Admiral Thad Allen, Admiral from the Coast Guard who managed the gulf oil spill cleanup, indicated that if he had better insights into the issues and ‘mood’ of people through social media listening techniques, he would be much better prepared with action plans to respond to concerns, issues, inquiries, etc.

B. Toyota Stuck Accelerator Recall – If Toyota was monitoring the chat and commentary via many social media sites, it is very likely that they would have been able to spot potential automobile defect issues starting to trend and handle them earlier vs. blowing up in the media.

C. Egypt Social Unrest – Many of our intelligence agencies were caught off guard at the speed and magnitude of the protests that eventually topped the Mubarak regime. A few experts say that the information that this was going to occur was right in front of them in the form of Twitter, Facebook, blogs, etc. If they had a social intelligence platform and methodology to interpret the information, it is also likely that this would not have been such a surprise to the CIA and other intelligence agencies.

D. Drug Issues & Recalls – Had Pharmaceutical and Life Sciences Companies had a social or market intelligence solution in place, many say that companies would have been able to spot very early the issues with Vioxx, Tylenol, etc. Many people were commenting about the problems with these drugs via social media, but many companies were not listening, hence unable to respond until the issue hit crisis mode.

A. What is Social & Market Intelligence – Social Intelligence is the collection, aggregation, assimilation and dissemination of information from social media forums, blogs, wikis, websites in order to spot key trends around topics of interest such as the following:
1. Key opinion leader sentiment,
2. Regulatory issues, news, public sentiment trends,
3. Consumer feedback on your products and services,
4. Consumer concerns with product safety or availability,
5. Public sentiment about current issues, political leaders, public policy, etc.
6. Public sentiment about how a crisis is being (mis)handled
7. Information on your company or brand activity such as consumer feedback, market issues, market facing issues or trends, new products/services, news, etc.
8. Information on competitor activity such as consumer feedback, market issues, market facing issues or trends, new products/services, news, etc.

This function is usually developed into a single Market or Competitive Intelligence portal as a one stop shop to all market insights. The information will also bring together functions such as text mining, comingling of structured and unstructured data and text, and trend analysis and alerting and will also integrate with Business Process Management (BPM) functions in order to make the insights collected – actionable.

B. What are the benefits – Why are companies and government agencies adopting social Intelligence capabilities?
There are many benefits to adopting this social and/or market intelligence capability as follows:

a) Ability to capitalize on competitor trending market issues or weaknesses
b) Ability to spot competitor trends or new market initiatives before they erode you market share
c) Ability to accurately spot Key Opinion Leader (KOL) issues, trends, or preferences in order to  respond with products/services/policies that are in-line   with these stated needs/preferences
d) Ability to spot consumer sentiment trends that will impact or change regulation that might impact your company or organization
e) Ability to gauge unmet market demand or needs via consumer sentiment
f) Ability to gauge trends in the social-political climate and mood of the country in order to accurately predict needed public policy changes
g) Ability to spot and respond to potential product defect trending issues early before they get to crisis mode and erode your brand image
h) Ability to have an integrated  ‘one stop shop’ repository for all market relevant information – news, blogs, web feeds, RSS feeds, structured data, unstructured data, text feeds, etc. 
i) Ability to accurately gauge social moods and perceptions during the time of crisis in order to develop responsive programs and messaging in order to demonstrate proactiveness and responsiveness
j) Ability to filter out social noise and one-off commentary vs. significant trends and market shifts

The trick in realizing these benefits is twofold. One, you must develop robust trending functionality in order to filter out the noise associated with a few comments being said about a certain topic in order to be focused on rapidly building or significant trends vs. sentiment blips.  The second is integrating the social insights with Business Process Management (BPM), so that actionable projects or programs are put in place once significant and impactful trends are spotted. Chart 1 Illustrates how the social media listening lifecycle should be structured in order to develop a robust social and market intelligence capability.

CHART 1

  

 

C. The hottest tools/applications in the market for this capability

Some of the hottest platforms in the social listening space are as follows:
Leading Social Listening Tools:
1) Attensity – Attensity Analytics Suite. Social Monitoring and Analytics
2) Converseon – Conversation Monitor, Conversation Miner. Converseon also performs outbound social conversation management via their Conversation Manager
3) Jive – Social Media Engagement Platform – Inbound Monitoring and Outbound Community & Conversation Management
4) Lithium – Social Media Monitoring Console (formerly Scout Labs). Lithium is also a leading conversation management platform.
5) Nielsen  – BuzzMetrics. Nielsen also performs outbound social conversation management via BuzzMetrics.
6) Radian6 – Radian6 Listening Dashboard. Radian6 also performs outbound social conversation management via the Radian6 Engagement Console. 
 

Next Tier (alphabetically):
1) Alterian – SM2
2) Collective Intellect – Social CRM Insights
3) Cymfony – Cymfony Maestro Platform
4) Dow Jones – Dow Jones Insight
5) Evolve 24 – The Mirror
6) Visible Technologies – TruCast Suite

In addition to the social listening companies and platforms above, many new firms are entering this space at an incredible pace. I recently performed a vendor selection for one of my clients with many of the above tools and the selection process was extensive.  If anybody needs additional insights into these vendor or platform capabilities, please feel free to contact me for assistance.

D. How do you implement it – what are the steps and considerations on implementing this capability within your organization and company

I have developed this capability for several Fortune 500 companies and the capability can be enabled via three (3) Major steps as follows (Summarized):

A) Step #1: Develop a Social Media Monitoring and Strategy including the following:

1) Social Intelligence Strategy/Vision, Objectives, Business Drivers, Critical Success Factors, Community/ Forum Listening Strategy, Key Metrics & Performance Plan, Organizational Plan, Change Management Plan, Communications & Risk Management Plan, monitoring policies, governance plan

B) Step #2: Social Media Technology Platform Evaluation & Selection
     1) Identify potential social media platform & community management vendors
     2) Develop Needed Listening Requirements and Capabilities
     3) Perform Technology Platform Vendor Selection
     4) Onboard Vendor

C) Step #3: Develop Social Media Program Pilots & Deployment Plan
     1) Develop Pilot Project & Deployment Plan
     2) Develop Technology Pilots
     3) Develop  Program Pilots
     4) Develop Organization & Process Pilots
     5) Deploy Pilots and Programs including
           a.  Center of Excellence Deployment
           b.  Multi-Channel Integration
           c.  Policies/Processes
           d.  Roles, Rules, Responsibilities
           e.  Change Management

In summary, Social Intelligence, Social Monitoring, Competitive Intelligence and Market Intelligence are gaining a great deal of Momentum.  Many Fortune 500 companies are either planning to implement this capability or already have.  The practice has gained so much momentum there are even associations and groups being formed like the Strategic and Competitive Intelligence Professionals (SCIP) group (http://scip.org/index.cfm ) in order for members to collaborate and share best practices. Is your organization planning on implementing this potentially game-changing capability? If so, give me a call, I call help you achieve world-class programs that enable you to surpass your competition and bring your organization or agency to the next level of market and social intelligence.

Governance & Organizational Design for World-Class Social Media & Customer Management Programs

Governance & Organizational Design for World-Class Social Media & Customer Management Programs

By Steven M. Jeffes
 
1) Background – Lack of Effective Governance can Wreak Havoc on Social Media & Customer Management Programs
 
In my previous blog entry titled “Social Media Pitfalls and Mistakes – the Seven Deadly Sins of Social Media Programs”, I covered the major mistakes companies make when developing and managing enterprise level Social Media programs.  One of the points that I focused on was not developing an effective governance model and organization in order to oversee and manage the strategic direction and overall success of a social media program.
  
The lack of an effective social media governing organization is the most widely encountered issues by companies and can, by far, be the most damaging to the activities of social media & customer management program. An effective governance model is absolutely critical and will directly influence the overall quality of a social media and customer management program.  The following lists the potential impact of not having an effective governance model for your social media and customer management programs:
1) Inconsistent and overlapping customer communications
2) Infighting amongst departments and functions leading to highly inefficient operations
3) Inefficiencies and cost escalation due to inter-departmental duplication of effort
4) Programs that are consider unfair, confusing, inconsistent and ineffective by stakeholder and customer groups
5) Inability to improve or scale the program due the lack of focus on cross-organizational continuous improvement
  
The bottom line, if you can’t develop an effective governance model, you are not likely to have a very good social media & customer management program. The remainder of this blog post will highlight the critical considerations in developing a highly effective social media and customer management (CRM)
governance model.
 
       The following chart (Chart 1) from my firm’s SMARTE methodology depicts two different governance models for social media and customer management. On the left, governance of social media and customer management is performed with brand silos, each having their own unique version of dealing with their stakeholders and customers. While each program is effective in each silo and meeting the needs of the specific brand, there are many issues created from a company and stakeholder management perspective. There also many missed opportunities in terms of revenue optimization and cost containment.

Chart 1

In addition, the left side governance model in silos is prone to the following:
1) Duplication of effort between brands – higher costs
2) Lost customer management opportunities (i.e. cross/up-sell) – lost revenue
3) Lack of focus on cross-company efficiency and continuous improvement – higher costs
4) Perception by customers that the social media and customer management programs are not very effective – lost revenue, wasted capital
5) Frustration by employees of continually having to reinvent the wheel in terms of programs and customer interactions – higher costs

As seen below in Chart 2, the left side governance model in silos is much more likely to generate frustration and contempt from the customer’s perspective vs. the holistic governance model on the right. Refer to the following chart for a sample of the different types of customer comments each of these governance models is likely to generate. Obviously, the left side of the chart generates many more positive stakeholder and customer comments and it much more likely to result in higher customer loyalty, share of wallet, customer cross/up-sell opportunities and will generally result in lower costs and higher revenue.

Chart 2

Based on the above outcomes on both sides of the chart, the following rules apply to social media and customer management (CRM) governance:
 
Programs In Silos Stifle Effective Delivery (PISSED) – 
      These silo’s programs tend to create PISSED   
      stakeholders & customers
due to perceived inconsistent,
      inefficient and ineffective program delivery
 
Programs Leveraged Enterprise-Wide Aid Synergistic & Effective Delivery (PLEASED)
      Remember,  these non-silo’d programs tend to create 
      PLEASED stakeholders & customers due to perceived
      consistent, efficient and effective program delivery.
   

2) Impacts from Ineffective Social Media & Customer Management Program Governance

Based on my firm’s SMARTE methodology (SMARTE stands for “Social Media Adaptive/Responsive/Transcendent Enterprise”) and direct client experience, I have found that in order for Social Media and CRM programs to be highly effective, a company must develop and maintain an organization design and corresponding governance structure that maximizes the ability of the company to build and leverage enterprise-wide synergy. This governing structure must be built to avoid developing programs that exist in brand or channel specific silos such whereby everyone is developing their own flavor of social media and customer management that appears to the outside world to be inconsistent, unfair, non-relevant, unappealing or just another one-off initiative.
The following are the top 5 Impacts of poor organizational design and governance for social media and customer management programs from both an internal and external perspective:

Internal Impacts of Poor Organizational Design & Governance:
1. Many individual departments are attempting to develop their own flavor of Social media without any regard to consistency
2. Infighting exists between functions & departments on which direction the SM program should take
3. The department(s) that led the introduction of the social media program thinks they own the social media program and is attempting to control the program by dictating program rules, standards, policies, etc.
4. Lessons learned and cross-brand insights are not being cultivated and leveraged for the benefit of the entire company vs. individual brands
5. Social Media & customer initiatives seem ad-hoc and are really not driven by solid metrics, business cases, enterprise-wide strategic business plans, etc.

External Impacts of Poor Organizational Design & Governance:

 1. Stakeholders & customers receive contradictory messages from organizational silos (i.e. different brands, different messages – brand A special vs. brand B special discount vs. valuable customer total discount – all brands)
2. Stakeholders & customers are treated inconsistently based on the department they are interacting with or channel they are interacting with (Facebook vs. Twitter, on-line vs. traditional off-line channels)
3. Stakeholders & customers find your company’s content and messages ad-hoc (vs. themed) in terms of relevancy, timing, venues by which messages are communicated, etc.
4. Stakeholders and customers are not recognized cross-functionally, but rather just in brand silos which tends to create frustration (i.e. “I just told ‘brand A’ my preferences, why do I have to repeat this all over again for brand B!?”)
5. Stakeholders and customers are not treated differently based on their specifics needs and enterprise-wide profile (e.g. valuable customers that buy both brands A and B do not receive differentiated ‘valuable customer’ treatment across the company)

 

3) Best Practice Social Media & Customer Management Governance Design Principles:

In order to avoid a sub-optimized governance model and one that is in silos, some best practice design principles must be followed when developing and/or optimizing a social media or customer management program. The following chart (Chart 3) depicts a very small sample of the governance design principles put forth in my firm’s SMARTE social media methodology:

Chart 3

These governing principles are accompanied by an entire set of practices and methods for developing a governance model and corresponding governing organization. These were developed following over 50 successful consulting engagements on Fortune 500 clients involving the development and/or improvement of social media and customer management programs.
 
4) Sample Governance Organizational Structure:
A very typical governing organization for social media and customer management is shown in the following chart (Chart 4):

Chart 4

The key message in this chart is as follows:
1)  Policy and strategy for social media and customer management program must be holistic, based on cross-functional leadership direction that is applied and leveraged enterprise-wide
2) Program planning and tactics must be developed by mid-managers who have direct expertise and responsibility for stakeholder and customer communications & touch-points.
3) Operations and Interactions must be carried out by professionals who are well versed in customer management, social media interactions (i.e. social media conversation managers – topic to be covered in a future blog post), and who are incentivized to optimize the customer experience to the point of best in class stakeholder and customer excellence.

5) Conclusion & Share Your Stories:

The bottom line here is that, without a strong and well thought-out governance model for customer management and social media, you will likely end up with a chaotic and ineffective program.  Trust me I know as I am hired by many companies to help re-engineer the situation after they have gone awry. Anybody wanting to hear more about social media governance, please feel free to give me a call. 

Anybody else run into governance issues that they’d like to share?

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