Customer World

Future Corporations - A world without HQs. Only HUBs

C.K. Prahalad and Hrishi Bhattacharyya write about a new world order that is transforming corporations:

Growth prospects for multinational corporations (MNCs) are expanding enormously. In Asia, Latin America, Africa, and Eastern Europe, there are more than 4 billion new potential customers whose rising incomes and aspirations have created an unprecedented market for all manner of goods and services. They want to own homes, to eat nutritious food, and to have varied entertainment options. They want toothpaste, cell phones, and motorcycles. To cater to these needs, business-to-business enterprises will be called upon to provide chemicals, cement, machine tools, electricity, and much more.

Many corporate leaders recognize this opportunity, but few are developing the capabilities or the management focus that they will need to realize its full potential. They persist in thinking of these new markets as “emerging markets,” separate from their existing customers in the industrialized world. Many companies have not reorganized their operations to serve a fully global economy.

Currently, most companies attempt to “go global” in one of two ways: centralization or decentralization.The gateway–hub structure represents a third alternative: a hybrid that reduces the tension between global integration and local responsiveness. Corporate leaders who are based in business unit–style organizations in selected gateway countries have a natural base from which to extend their footprint into nearby markets.Together, the 20 gateway countries — 10 from the industrialized world and 10 from emerging markets — account for about 80 percent of the world’s economic activity, and 70 percent of its 6.6 billion inhabitants. An MNC could most effectively expand its operations around the world by making it a priority to set up hubs in these gateway nations.

A gateway–hub structure can be flexible. A Chinese hub could manufacture goods for Greater China, other Asian markets, the Middle East, Europe, and the U.S. Conversely, a vibrant consumer market need not depend on a single hub: A hub in the U.S. could draw in goods from Brazil, China, and Mexico. All the hubs would probably be involved in manufacturing, but only some might incorporate research and development.

I personally think, we need to use markets/countries (effectively basis their strengths) that can add competitive advantage to various functions to an organization and get them to work in a networked manner. The challenge is to move these processes seamlessly across countries and that is what will make or break this structure.

The emerging BIG switch

I was reading an article in DM Review, on the emerging applications of business intelligence tools and the transformation expected in the future as 'information inventory' in enterprises gather pace over the next decade. While there are interesting trends on how BI applications will grow( which I have put together as a presentation), I would likely to slightly digress a bit and pick-out some thought-provoking points that has been made in the article:

I found a particularly interesting point that can have a profund impact on many business models which many business managers tend to dismiss or miss many a times:

"This is the trend that Nicholas Carr identifies in his book “The Big Switch: Rewiring the World, from Edison to Google” (W.W. Norton & Co., 2008). This refers to the trend of businesses switching from the internal deployment of software to the outsourcing of large-scale information processing systems, also known as software as a service (SaaS).SaaS is normally thought of as a simplification and economization of the installation, management and maintenance of software.

Carr’s argument is simple: during the industrial revolution, every factory had its own power plant – initially, water wheels and subsequently steam engines. As electrical service became widely available, a big switch took place, and as we know, few factories today have their own power plants because it became more economical for them to use electrical power supplied by utility companies. Carr’s point is that in a similar fashion today, most industries operate their own computer systems but soon will switch to having them managed by outside parties because it is more economical."

How's the BIG switch going to affect your business?

Is it possible for you to envision the big switch in your business that can become a game changer? I personally think this is happening to the so called analytical and marketing applications that I work with everyday. It's increasingly all about finding common business issues across business verticals, developing a common methodology to develop insights, identifying a platform to capture trends that the enterprise business users can access and getting them together quickly to create business impact. We need to have the ability to combine mass customization with scalability in our analytical marketing business.Am sure it's applicable to your business too!

THE BIG switch in BI applications

Coming back to the topic where I started,the article goes on to mention that Diagonal BI applications will substantially extend the benefits of SaaS and will accelerate the outsourcing trend in BI.

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Inside Steve's Brain- customer-centric design thinking

Here's an overview of the new book that's just got released - Inside Steve's brain ( Nishad sent this to me a few hours ago). Personally, it tells me a lot about the way the man is thinking, pushing( the people around him), acting-on( his instincts) and executing( without being worried about what the world thinks about him). Customer-centric enterprises need to have customer-centric design thinking - the way their products need to be conceived, designed and delivered. Steve just does it with impeccable perfection and style.    Here's the preview before you rush-out to buy:

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Lead management - Involve before you start!

A recent study from the Sales Lead Management Association (SLMA)  shows that many companies are ignoring their sales lead management.

Their 2nd annual Sales Lead Management Study, conducted with 144 businesses in Southern California, revealed the following results:

• 68.8% don’t qualify leads before sending them to their sales teams
• 52.4% have no formal process for compiling sales forecast reports
• 82.8% don’t track ROI for lead generation investments
• 55% rated low satisfaction with their SFA/CRM system, at 5 or less on a 10-point scale
• 52.1% use no SFA/CRM system to track the lead process

My View:  The gap between sales & marketing departments has only grown over the years.Sales has had a siloed process in enterprises and in my experience getting sales to see & appreciate good quality leads is always big problem. On the other hand, I have always found, lack of understanding what a good lead is the problem of most lead generation programs. Often there is a mix of science, logic and an intuitive feeling in the salesperson's mind which a software or a process cannot replicate. But, my belief is that right at the inception of a lead generation program, you need to have the buy-in of the sales team. The lead generation team must be 'considered' a part of the sales team and may be that's the reason there's a term coined as 'inside sales'! Nevertheless, the lead generation team, the software and the process must be seamlessly integrated to succeed. It has to start before the program is implemented and announced. That's the key to its success.

CMO council releases study on 'Leveraging Customer Data and Analytics'

Only 50 percent of global marketers report having a strategy for further penetrating or monetizing key account relationships, reports the Chief Marketing Officer (CMO) Council in a new research study, Business Gain From How You Retain . In addition, a surprising 45 percent rate the effectiveness of customer relationship management (CRM) systems as deficient or needing more work, with only 15 percent of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

 

Conducted in late 2007 and early 2008, the CMO Council's Business Gain from How You Retain study undertook a wide-ranging evaluation of where and how marketers are "operationalizing" customer intelligence and insight to reduce customer churn, increase lifetime value, improve the customer experience, and increase the effectiveness and targeting of marketing spend.

More importantly, marketers are struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas, and a limited strategic focus or management mandate on Customer Data Integration (CDI). Compounding the issue is a lack of formalized data-sharing policies and practices in the organization, combined with internal political or cultural barriers and IT obstacles and objections to data integration.

 

"We are seeing a fundamental need for marketers to be more effective at tapping the valuable vein of customer data that runs deep inside all organizations," notes Donovan Neale-May, Executive Director of the CMO Council. "Investing in integrated systems that harvest customer insight is critical to driving both marketing and business performance," he adds.

•       Only 15 percent of marketers say their companies are doing an extremely good or effective job of integrating disparate customer data sources and repositories; 55 percent note there is room for improvement or a deficiency in this area.
•      More than 31 percent of companies surveyed had customer churn rates of more than 10 percent and 32 percent reported turnover of five to 10 percent. In comparison, more than 62 percent said they desired or expected a churn level of less than five percent.
•      Respondents believe customer churn significantly impacts business performance through revenue loss (59.9 percent), reduced profitability (39.6 percent) and greater marketing and re-acquisition costs (36.3 percent). 
  
•      While churn is a big issue, nearly 67 percent of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships.

•       While more than 35 percent of respondents report that the CMO or marketing department (38.9 percent) has primary responsibility for the customer analytics function, they are not leveraging its value. Over 31 percent of those surveyed do no data mining at all and 63 percent are only doing moderate levels of data mining for intelligence and insight.

•             The top six strategic applications of customer information by marketers include:

                        - Up-selling and cross-selling
                        - Segmenting and targeting
                        - Driving retention, loyalty and promotional programs
                        - Identifying new opportunities and unmet needs
                        - Improving customer service
                        - Shaping personalized and customized communications

•      Key initiatives to increase customer retention include improving customer communications (65.2 percent); addressing complaints, problems and pain points (51.8 percent); and enhancing the customer experience (54.8 percent). Unfortunately, fewer marketers noted their companies' willingness to modify business practices and policies to accommodate customer needs.

The laws of physics behind marketing methods

I read an interesting post about how the rules of mass marketing, direct marketing & social media are so different in approach, content, analysis and results. Therefore, for marketers, the challenge of applying & measuring each of them is conflicting, different & downright confusing. The truth though is that data(at an individual customer level) is becoming the DNA for marketing and incremental byte-sized data from each of them come at different points of time - controlled to near-real to real.The key, therefore, is knowing how to use it, apply it basis the method of marketing marketers are executing or seeking solutions for, not making the mistake of transposing one type of marketing hypothesis to the other etc. are key factors of being a successful marketer tomorrow.

Take a look:

Mass advertising is like Classical Physics; large-scale, mostly intuitive and somewhat predictable.

Direct Marketing is like Atomic Physics; small/medium-scale, mostly logical, but the segmentation aspects start to show some bumps and troughs on what appeared to be smooth and simple.

Social Media is more like Quantum Physics; small-scale, counter-intuitive and usually unpredictable.

• Traditional marketers deal with everyones opinions in big bins like sales figures, national focus groups, opinion polls, etc. These roll-ups average out the inconsistencies of individuals and blur together to form tendencies, trends and preferences. The actions taken in mass marketing can expect a relatively consistent result (i.e. send out a coupon and you can expect a certain level of redemption and sales revenue to come from it and the larger the audience, the more likely it is to average out at a predictable result). This is the world that marketers are familiar with and all-in-all it makes sense if you know the system.

• Social Media on the other hand acts on the niche and individual level where things are a lot less certain. The complex nature of blog posts is hard to parse out into definitive numbers and trends.The lack of large numbers makes the reaction and result of social media efforts difficult to determine and measure. It is much more difficult to roll up all of these disparate opinions into a meaningful decision than to look at an opinion pie-chart.So in essence, social media tools have given marketers a microscope powerful enough to see what is going on at smaller scales.

...many marketers in the classical camp are not very happy with what they see, because it doesn’t confirm what they thought they knew. Decisions which appear obvious when looking at large sample sizes becomes more nuanced and contradictory when you see everyone as an individual.

How do measure Customer Engagement?

MarketingNPV provides an in-depth point of view on measuring engagement. This is a complex and evolving subject in marketing. The key however is to start small, keep defining & redefining it, see the results and keep improving it all the time. I think customer engagement must include all touchpoints beyond just net, blogs. It should include store visits, branch visits, call centre, product usage, cross-product holding, depth of features & benefits used by the customer etc.

Take a look at how they see it:

Two Types of Engagement

There are two generally accepted engagement “types”: emotional engagement and behavioral engagement. The former is more popular; the latter is more important.

Behavioral Engagement

It’s important to note that behavioral engagement is not limited to a purchase of a product or service; it encompasses all the interactions that a prospect or customer has in relation to a brand. There are any number of pre- or post-sale activities that can be (directly or indirectly) predictive of a future purchase or re-purchase; they include visiting a Web site, downloading a whitepaper, calling customer service, recommending a product, or even commenting on a blog.

There’s plenty of data available to track how customers or prospects are engaging with a company; the key is to synthesize it into a clear model for demonstrating either short- or long-term economic benefit.

To probe more deeply into these drivers, your next step will be to identify places on the map where you have good data and where you don’t. Look beyond the traditional customer survey information, brand-tracking studies, and the CRM system. What Web analytics are you capturing? Do you have access to point-of-sale data or call-center transcripts?

The key to measuring engagement is:

a. Develop a vision
b. Create a methodical testing process
c. Look for predictive validity of upstream behaviours
d. Leverage your engagement drivers

Marketing - How is it changing?

Forrester, has come-up with some research around emerging trends in marketing ( ahead of their Marketing Forum 2008) - Engagement is becoming an important metric. Key highlights include:

Marketing leaders steer based on hard data. Measuring engagement will take the guesswork out of budget allocation. Engagement can drive awareness, transactions, brand preference, and loyalty. But each of these objectives requires a different approach and investment in people, processes, and technology.Marketing leaders from firms like CompUSA and BMW prioritized one goal, chose a very specific set of tools and vendors, and successfully moved the needle on transactions and loyalty, respectively.

Direct marketers and market researchers unearth deep client needs. Leading direct marketers already combine Web clicks with purchase and loyalty data to unearth a consumer's interaction with the brand. But BrandIntel went a step further and recorded the content that users generated and other consumers read.

eCommerce professionals drive online sales with personalization. More than a third of Web visitors will make a purchase after seeing a personalized recommendation. eCommerce professionals can boost online sales with one-to-one personalization.

Customer experience professionals innovate the brand. Whirlpool observed people at home and used the results to develop a new sub-brand -- Gladiator -- with fridges for men in their garages.To meet these uncovered needs, customer experience professionals will develop a disruptive strategy, simplifying the interaction, amplifying the service elements, and repositioning the brand overall.

My view:  Involvement, Interaction, Intimacy & Influence - 4Is as Forrester calls it, needs to be measured by marketers on a regular basis. This will increasingly make marketing more data-led. They need to be building programs around the 4Is using data. It is important that they start fusing transactional data with web data - clicks, blogs, social networks etc. along with customer service data. This will increasingly give marketers a peek preview into how customers feel, think and talk about their products and personalize their marketing efforts basis the degree of engagement they have identified with these set of customers. 

Personalized communication - Is it lack of data or resolve?

The CMO council in its new global survey, "The Power of Personalization"  has some interesting pointers on potential opportunities that enterprises have in exploting this approach and strategy.

According to the survey:

• Inadequate customer data is the key obstacle facing top marketing executives in their adoption of personalized communication techniques.
• Many CMOs feel the process of developing individualized marketing messages is still largely under-utilized and under-tested.
• More than 55 percent of respondents plan to allocate 10 percent or more of their marketing budgets towards personalized communications, despite their reluctance to declare their personalization efforts successful in the past.
• Many marketers' programs have been deemed unsuccessful because of a lack of actionable customer data used in campaign planning -- as well as because of inadequate analytics used in assessing post-campaign effectiveness.
• 55.1 percent of respondents plan to increase their 2008 marketing budget allocations for personalized communications by more than 10 percent.
• 49.1 percent of respondents blamed "inadequate systems and infrastructure" for limiting personalized communication initiatives.
• "Lack of customer data and insight" and "cost and complexity" were also cited as major contributing factors by 46.2 and 43 percent of respondents, respectively.

My View: I personally believe that many marketing departments in companies are struggling with this new order of availability of customer information, left-brain marketing techniques(viz. analytics) and competency to leverage technology tools. Earlier they had to just "inform", now they need to use customer information to "interact". The traditional job roles and responsibilities need changes, as marketing departments need to have people who understand data, technology and interpret individual customer behaviour.I think marketers must learn to use simple tools, extract whatever data is available and show quick-wins rather than wait for technology infrastructure to be perfect to adopt this approach as they scale-up this kind of marketing. Also, product managers must also have under them customer information managers/ executives who could effectively lead this process. It is also important that the silos in organizations have to be brought together by the CEO to ensure information is used effectively for the enterprise rather than a particular line of business. May be new accounting methods of attributing income, because information of a line of business is used for the other, should be designed for wide adoption of such practices in enterprises.In my opinion, personalized marketing is more than just the 'intent', it is the 'intensity' that can make the needle move!    

Treat data with respect

According to a research released by Royal Mail, an estimated 90 per cent of companies fail to exploit data they already hold  on their customers!

It was really disturbing to me as I went thro' some highlights of the report as to how companies value data. In my opinion, in the coming decade, data is going to be every enterprise's only competitive advantage and companies can't take this data casually given the value it can derive, as this research shows.

Take a look at the topline findings:

• Only 15 per cent of companies declare their data as an intangible asset on their balance sheets.
• Data is proven to be a fundamental asset. A firm understanding of a customer database can significantly bolster the bottom line and add value to the company itself, potentially adding millions to a sale price.
• Huw Davis Partnership founder Huw Davis says that clients have increasingly been asking him to value databases over the last few years, and he would recommend more businesses to do so.
• Most companies are getting less than half of the potential value from their customer
  data.

By addressing the data problem, enterprises could potentially increase their value by up to 30 per cent. It is imperative that enterprises look at ways and means to design a customer data strategy road map and extract value from it.

Forrester's ladder of participation and impact on marketing

I was reflecting over the weekend about Forrester's Social Technographics Ladder of Participation. While it was focussed on emerging social technologies, I felt there were some trends, learnings and practices that can be applied from here to refresh marketing thinking, practices, evolving needs to embrace technologies that can make some changes happen and thereby make marketing more relevant to enterprises and CEOs. Let's take a look at this Ladder of Participation first:

I see the marketing eco-system too, taking a very similar shape(with either customers or prospects) in the years to come. The need to 'engage' and run marketing campaigns across a similar ladder is bound to become increasingly important. Marketing will need to 'bucket' its segments of customers or prospects across the spectrum of Inactives to Creators. The 'old world marketing' practice would have stopped with collecters - who I would define as repeat purchasers. Normally, marketing practices would have stopped there.

But, in the 'new world of marketing', customers will be more involved, participative and conversational. Thereby, customers will leave a 'trail of information' behind, in enterprises. For an enterprise, the creators will be the most loyal and demanding. They need to be recognized, valued and encouraged to converse. The ones who do it, will become identifiable and the most important. Also, products/brands will have to become 'information platforms' in such a world. This will also lead to customized design of products and services for them.

The critics are the ones who will have to be 'listened' to. With emerging channels or touch points, the enterprises must open a channel of communication to hear and rectify their problems. They are the ones who can potentially move-up the ladder of participation.

The collectors need to be 'prodded' to talk rather just buy again and again, get them to share their experience and frustrations with the product. And the joiners will have to be moved to become collecters.

This kind of marketing will combine a lot of information, analytical insights, real-time marketing automation to talk to customers in different behavioural states and stages in the ladder. And when enterprises talk of millions and millions of such identified customers or prospects, the need for marketing to deliver scalable, real-time, right-time marketing will only become sacrosanct. The ones who will practice it, will have the ear of CEOs/CFOs and the rest will be left behind.

 

    

Understanding the power of customer lifecycle

David Baker provides some interesting insights on customer lifecycle. I quite like the idea of identifying "switch points" when a customer is likely to switch to another product/brand or is ready to move to a product in the higher tier. The key question to me though is the ability of companies to identify such "customer states" or "behaviour states". Marketing needs to quickly start learning that art of using customer information, drill down and observe these changes in customer patterns and take appropriate action.

He writes:

If you are like most people, you have stages of life and all things around you; people and environments change dramatically over time. We have an early life stage where we learn the primary elements of surviving in this mixed world, the basics, as we could call it. This is where we form our basic judgments, values and shape who we are and the paths we'll lead. This is where we learn to develop our community of generations, or simply break out and build our own communities. We have many milestones that we go through: high school graduation, college for some, young adult life in the working force, family development and planting roots into a community. We then drift into the middle stages of our life, where many foster these communities and evolve the next stage of life till we get to the celebrated later stages of our life and bask in our wealth and watch our families grow up.

A customer lifecycle is just that. It is the foundation of consumer involvement with your brand over time. A customer lifecycle can shift over time, as consumers come in and out of different lifestages.

The key to marketing exactness in developing a lifecycle program is to identify "switch points" when a customer is likely to shift away from your brand, consider new alternatives and potentially develop some brand affinity with your competitor. Many in the marketing space trigger off of key income milestones. We graduate from college, we get married and have dual incomes, we start a family, we invest in our first home, we buy our first automobile, we consider life insurance as a means of protecting our family, we look more closely at investment options. All are viable triggers.

Don't purge that consumer from your database or program if they don't respond; don't purge them if they don't buy. Look deeper and see if a lifestage is influencing their involvement with your brand. That's the essence of marketing!

NYSE CEO Report 2008 - Focus on the customer

Frank Capek drew my attention to a recent report  on how customers & devoting signifcant executive time on managing customers will be central focus of CEOs during 2008 (Report)

From the executive summary:

”The first theme is that this may be a year in which there is renewed vigor around the customer - 2008 may be a year where many CEOs put the customer at the top of the long list of issues on which they must focus. Why?  Simply stated - customers are at the core of growth.  Here are a few points from this year’s study that are the foundation of this theme:

• CEOs are planning greater investment, both budget and time-wise, on customer relationship management.
• The importance of sales growth as a performance measure has increased since the prior study. Customers are the engine of sales growth.
• Brand, reputation, and investments in corporate social responsibility are more important this year - all efforts that are focused on the winning the hearts and minds of the customer.
• While many CEOs say it is easier to attract customers than it used to be, many, particularly outside the United States, say it is getting harder to retain customers. CEOs recognize that losing customers can be costly.”

Key take-out: It's heartening for me to note that managing customers will be on top of CEOs' agenda. To make it a reality,I think they will have to spend significant time in driving it down the organization - amongst their business heads and their ranks. This has always been a key challenge as there are a lot of issues regarding channel conflicts, change management, marketing budget allocation, linking performance incentives wrt customer management goals, technology investments, profit & cost allocation etc. that will need their focus, to drive this kind of a culture in an organization. Also, they will have to invest significantly in identifying metrics and measurement dashboards around how customers are being managed real time in an enterprise and drive this relentlessly across lifecycle of their customers over the next couple of years once they make a start in 2008.

 

Single view of customers across the enterprise gain attention

While there has been lot of discussions around the need for single view of customers across an enterprise over the last few years, 2008 seems to be a year when this trend could gain a lot of momentum.

Aberdeen Group surveyed over 250 companies to identify the strategies, capabilities and enablers that Best in Class (BIC) companies are using to improve sales and marketing alignment.

Some highlights from the report:

• Best in Class organizations plan to invest in analytics at 1.4-times the rate of the Industry average and 1.7-times the rate of laggards.
• The customer is the core of BIC companies' plans to alleviate the pressure of increasing top-line revenue. Eighty percent (80 percent) of the BIC grate lead qualification and measurement efforts between sales and marketing, compared to 55 percent of laggards. Further, 25 percent of the BIC are preparing to better meet customers' product configuration or personalization needs.
• BIC firms are developing processes around the customer's needs. As customer knowledge and expectations rise, the BIC are adapting. The BIC are 1.9 times more likely than laggards to formalize processes for generating customized proposals, and 1.4 times more likely than laggards to set standards for knowledge sharing between sales and marketing.
• Sixty percent of the BIC currently have cross-functional teams, with an additional 15 percent planning a change.Over one-third of laggards have no plans to implement cross-functional teams. Working side by side facilitates knowledge transfer and increases operational efficiencies. The BIC are also adding operations roles to support sales and marketing. Currently 40 percent of the BIC have these resources in place, and 75 percent of them plan to increase their investment in dedicated personnel next year.

To me it looks like many companies will be putting together a lot of plans around setting-up cross-functional, collaborative teams to enable customer-centricity in their organizations. Also, the need for technology to get a single view of a customer's journey across the enterprise  is becoming more important to extract value/ROI out of marketing investments they are making, is getting a lot of focus amongst CXOs.

Eight predictions for marketing in 2008

We are coming to the end of 2007 and dawn of another new year. It's time for predictions again, I presume! Chief Marketer has some predictions:

1. There will be an ongoing emphasis on “engagement” measures. This is getting harder and harder to measure using models that had already lost their efficacy in 1985, and when you combine that with the power of today’s “bionic” consumers, born hot-wired into the Internet with an iPod in one hand and a TiVo controller in the other, engaging them will be the only way of guaranteeing loyalty and profitability.
2. More “brands” will become “Category Placeholders.” As brands become more and more enamored with and enmeshed in “new” media like social networking and messages beamed into consumers’ living rooms from outer space, marketers need to ensure that their brands actually stand for something in the mind of the consumer.
3. Companies will have to move from saying they’re ”Green” to actually being “Emerald City Green.” Playing in the environmental arena won’t be an option in 2008 and brands and holding companies will have to find ways of positioning their offerings in ways that meaningfully support a sustainable future.
4. Media planning will become more touch point focused and personalized.
   Planners will still classify touch points as “above-the-line,” “below-the-line,” and “new,” but planning will be based on three critical considerations: a) which touch point best reinforces brand values, b) where the brand + media equation yields real engagement, and c) where the plan is seamless, believable, personalized, and authentic.
5. Behavior will (finally) trump attitude.More marketers will come to realize that “to know you is not necessarily to buy you” (or, for that matter, even like you). Loyalty and engagement metrics – particularly those configured to provide brand-to-media engagement measures—will be used to identify behavioral “hot buttons” that marketers can add to their toolboxes and their search efforts.
6. Consumer expectations will once more grow.Brands are only barely keeping up now. Expectations remained stable for a short time, but only while consumers were catching their breadths and adopting –then devouring – the newest of the new technologies and innovations.
7. Personal health management will impact brand engagement and loyalty.U.S. obesity is at an all-time high, with Americans among the fattest people on earth. This increase is primarily the result of consuming more calories, that behavior the direct result of technological innovations making it possible for food to be mass/fast prepared far from the point of consumption, and coconsumed with lower costs of preparation (even if you factor in marketing costs).
8. Innovation and loyalty will matter more. What is clear is that the ever-expanding universe of brands will require an informed action plan – one that makes sense to the people on the brand and marketing side of the equation, but one that also accurately identifies and capitalizes upon what people on the consumer side really feel, really want, and really believe. nsumed with lower costs of preparation (even if you factor in marketing costs).

Capital One's Card Lab - Get your customized credit card

Capital One recently announced the launch of Card Lab.  Ron Shevlin writes about this:

Capital One launched Card Lab, which it claims is the first “do-it-yourself” credit card offer. It’s an interactive tool that lets prospective card applicants choose among a number of options to build their own card package. Not surprisingly, you can’t get a 25% annual bonus and 2 points per $1 charged and 1.25% back on purchases and….you get the picture (otherwise see below).

My take: Card Lab is a winner because it:

1) Builds up versus narrows down. Card Lab’s approach puts prospects in charge, and presents the options in such a way that they can easily see the tradeoffs they make when selecting certain options.

2) Engages with interactivity.Card Lab, on the other hand, is a great demonstration of the interactivity the channel is capable of delivering. Serious prospects can play what-if to their hearts’ content in order to understand the product features and tradeoffs available to them.

3) Yields actionable data.The web analytics folks at Cap One are going to have a field day with Card Lab. Analyzing the usage, trends, clickstream, etc. should help Cap One marketers get a really good understanding of who’s looking for cards online, what their preferences are, which features are most popular, and so on.

I agree with Ron completely. It's a great idea and extremely customer-focussed.But, CardLab sounds a little intimidating to me.Another key issue though is actually the process of accepting or rejecting applicants - that is, how customer-level data is connected real-time for approving and disapproving an application as credit cards are fraught with credit-risks. Am sure Capital One has the process taped-up for this.But, this is a key factor for positive customer experience and product adoption. 

Here's one more product that fits-in with all the advantages what Ron is talking about:

Closer home in India, my example is HDFC Bank's NetSafe card for customization,customer-centricity and the method to manage the process well. It's a lovely little product. In fact, it works on the fear of Net Security which is a primary concern for credit card customers using their cards online.

NetSafe, is a unique online payment solution that offers complete security while shopping on the Internet. With NetSafe, customers can shop online through a virtual credit card, without revealing their actual HDFC Bank Credit Card number. What's more,they can use the HDFC Bank Debit Card(Check Card) also for online purchases. Customers here choose their account limit for this specific card - Value of credit limit, date of expiry of the card etc.! Customer can create as many online credit cards as possible(subject to the overall accepted credit limit).

Emerging Technology trends that will shape business and economic growth - McKinsey's perspective

Carleen Hawn has drawn-up a nice summary of McKinsey's article.

Technology alone is rarely the key to unlocking economic value: companies create real wealth when they combine technology with new ways of doing business. … we have identified eight technology-enabled trends that will help shape businesses and the economy in coming years. These trends fall within three broad areas of business activity: managing relationships, managing capital and assets, and leveraging information in new ways.

A. Managing relationships

1. Distributing cocreation

The Internet and related technologies … allow companies to delegate substantial control to outsiders—cocreation—in essence by outsourcing innovation to business partners that work together in networks. By distributing innovation through the value chain, companies may reduce their costs and usher new products to market faster by eliminating the bottlenecks that come with total control.

The Caution:
Companies pursuing this trend will have less control over innovation and the intellectual property that goes with it, however. They will also have to compete for the attention and time of the best and most capable contributors.

2. Using consumers as innovators

Consumers also cocreate with companies; the online encyclopedia Wikipedia, for instance… Companies that involve customers in design, testing, marketing (such as viral marketing), and the after-sales process get better insights into customer needs and behavior and may be able to cut the cost of acquiring customers, engender greater loyalty, and speed up development cycles.

The Caution:
But a company open to allowing customers to help it innovate must ensure that it isn’t unduly influenced by information gleaned from a vocal minority. It must also be wary of focusing on the immediate rather than longer-range needs of customers and be careful to avoid raising and then failing to meet their expectations.

3. Tapping into a world of talent

… Much as technology permits [companies] to decentralize innovation through networks or customers, it also allows them to parcel out more work to specialists, free agents, and talent networks…new talent-deployment models could emerge [and] changes in the nature of labor relationships could lead to new pricing models that would shift payment schemes from time and materials to compensation for results.

The Caution:
This trend should gather steam in sectors such as software, health care delivery, professional services, and real estate, where companies can easily segment work into discrete tasks for independent contractors and then reaggregate it … Competitive advantage will shift to companies that can master the art of breaking down and recomposing tasks.

4. Extracting more value from interactions

Companies have been automating or offshoring an increasing proportion of their production and manufacturing (transformational) activities and their clerical or simple rule-based (transactional) activities. As a result, a growing proportion of the labor force in developed economies engages primarily in work that involves negotiations and conversations, knowledge, judgment, and ad hoc collaboration—tacit interactions, as we call them. By 2015 we expect employment in jobs primarily involving such interactions to account for about 44 percent of total US employment, up from 40 percent today.

The Caution:
Tere is still substantial room for automating transactional activities, and the payoff can typically be realized much more quickly and measured much more clearly than the payoff from investments to make tacit work more effective. Creating the business case for investing in interactions will be challenging—but critical—for managers.

B. Managing capital and assets

5. Expanding automation

Companies, governments, and other organizations have put in place systems to automate tasks and processes [like] forecasting and supply chain technologies…. Now these systems are becoming interconnected through common standards for exchanging data and … this information can be combined in new ways to automate an increasing array of broader activities, from inventory management to customer service.

The Caution:
Automation is a good investment if it not only lowers costs but also helps users to get what they want more quickly and easily, though it may not be a good idea if it gives them unpleasant experiences. The trick is to strike the right balance between raising margins and making customers happy.

6. Unbundling production from delivery

Technology helps companies to utilize fixed assets more efficiently… Information and communications technologies handle the tracking and metering critical to the new models and make it possible to have effective allocation and capacity-planning systems. Amazon.com [has] expanded its business model to let other retailers use its logistics and distribution services [and] independent software developers … buy processing power on its IT infrastructure so that they don’t have to buy their own. Mobile virtual-network operators, another example of this trend, provide wireless services without investing in a network infrastructure.

The Caution:
Companies that make their assets available for internal and external use will need to manage conflicts if demand exceeds supply. A competitive advantage through scale may be hard to maintain when many players, large and small, have equal access to resources at low marginal costs.

C. Leveraging information

7. Putting more science into management

Technology is helping managers exploit ever-greater amounts of data to make smarter decisions and develop the insights that create competitive advantages and new business models. From “ideagoras” (eBay-like marketplaces for ideas) to predictive markets to performance-management approaches… Leading players are exploiting this information explosion with a diverse set of management techniques. Google fosters innovation through an internal market: employees submit ideas, and other employees decide if an idea is worth pursuing or if they would be willing to work on it full-time.

The Caution:
Leaders should get out ahead of this trend to ensure that information makes organizations more rather than less effective. Information is often power; broadening access and increasing transparency will inevitably influence organizational politics and power structures. Environments that celebrate making choices on a factual basis must beware of analysis paralysis.

8. Making businesses from information

Accumulated pools of data captured in a number of systems within large organizations or pulled together from many points of origin on the Web are the raw material for new information-based business opportunities… market imperfections include[ing] information asymmetries and the frequent inability of decision makers to get all the relevant data … allow middlemen and players with more and better information to extract higher [prices] by aggregating and creating businesses around it.

The Caution:
But that sword can cut both ways; today’s aggregators, for instance, may themselves be aggregated tomorrow. Companies relying on information-based market imperfections need to assess the impact of the new transparency levels that are continually opening up in today’s information economy.

The difference between CRM and CEM

Lauren Hoyt, Editor, SearchCRM provides some great perspective on the difference between CRM and CEM( Customer Experience Management):

First there's the question of a definition. I asked Lior Arussy, one of the thought leaders in this arena, to define customer experience management.

According to Lior, a customer experience is the total value proposition provided to a customer, including the actual product and all pre- and post-sales interactions with the customer. Meanwhile, CEM is the science and art of managing all interactions with customers across all touch points in order to maximize the value provided to customers.

"There are quite a few differences between [CRM and CEM]," Martha said. "If we look at CRM, that's how a customer looks to a company. And if we think about CEM, that's really how the company looks to the customer ...we're talking about making it worthwhile to do more business with us because we become more worthwhile to them. It's taking the time to see their point of view, understanding how to be reciprocal with them, understanding how to be trustworthy."

"CEM systems and CRM systems serve different, although complementary, purposes," he said. "While CEM is about creating the best customer experience, CRM is about managing relationships while focusing on maximizing revenues. CRM is tools geared to manage and analyze customer information, while CEM is tools geared to enable and enhance customer interactions."

One more perspective on the future of marketing

I have been posting a lot of thoughts on the future of marketing and how it's changing dramatically. Here's one more perspective from Idris Mootee. He has an interesting presentation on this topic which brings to life the challenges that lies ahead for CEOs, CMOs and their communication partners.Take a look:

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Forrester’s 2007 Customer Experience Rankings

Bruce Temkin writes about the recently released Customer experience rankings by Forrester:

#1 ranking in Forrester’s 2007 Customer Experience Index (CxPi)…

The 2007 CxPi ranks 112 firms across 9 industries: Banks, Credit Card Providers, Health Plans, Insurance Firms, Internet Service Providers, Investment Firms, Retailers, TV Service Providers, Wireless Phone Carriers. The CxPi is based on consumer evaluations across three areas: 1) usefulness; 2) ease of use; and 3) enjoyability (see the methodology section below).

Here are the full 2007 CxPi rankings…

Costco took the top spot in the CxPi rankings - just barely beating out Borders. At the other end of the spectrum, Charter Communications landed at the bottom of the CxPi rankings. Here are some additional insights about the overall results:

• Retailers take nine out of the top 10 spots. All but one of the top 10 firms in the ranking is a retailer - and the only non-retailer isn’t a single company but a segment of banks called credit unions. Interestingly, all three wholesale clubs - Costco, BJ’s Wholesale Club, and Sam’s Club - made it into the top 10. Another retailer, Walgreens, came in at No. 11 to round out the firms that received an “excellent” rating.
• Communications firms, health insurers, and banks dominate the bottom. Four organizations ended up with “very poor” CxPi ratings: Charter Communications (for both TV and Internet), Medicaid, Cablevision/Interactive Optimum, and Aetna. Two other health insurers (United Healthcare and Anthem), two large banks (Citibank and JP Morgan Chase), and Sprint filled out the bottom 10.

CxPi Results Across Industries

We also looked at the overall results for the 9 industries included in the CxPi. Here’s how they did across all three components of the CxPi … 

Our 27 retailers significantly outpaced the other industries with an average overall score of 78%. Retailers owned the top spot in each of the three underlying customer experience categories as well, winning both ease of use and enjoyability by wide margins.

Does P&G need another community portal or a platform?

Procter & Gamble has launched a portal for pet lovers - petside.com. According to NY Times:

...Web portal that looks something like a Yahoo or AOL for pet owners, with a bit of Facebook and MySpace thrown in.The site, Petside.com, offers a full menu of information about dogs and cats, from the serious (how to diagnose your pet’s illnesses) to the silly (funny animal videos). There are links to shopping sites (like Petco.com) and articles about topics like what to do if visitors are allergic to your pet (hint: vacuum). Visitors are encouraged to set up social networking profiles in order to meet other pet owners.

While it's a great idea, it raises some questions in my mind. Frankly, I don't have all the answers but it can set a context for a discussion, I think:

1. Can such portals aggregate "interested" customers and create sustained interest ?  Am not sure. There is a lot of content on the web for pet owners. I think marketers need to add context around the content rather than just content. I personally don't think there is a need for one more portal and consumers are not waiting for one, I presume.
2. Is it still old world thinking? The TV era was about creating content and it helped aggregate audience. During the later years,there was proliferation of channels but it was still limited. The internet has opened-up a flurry of 'content creators' with micro audiences. So, it may just  be impossible to lead with content alone. The clutter in  new media is  lot more higher than traditional media. If TV soaps had a 13 or a 26 week interest, such content might have 13 days or 26 days interest?!! How do marketers keep the momentum going?
3. How can P&G create a platform? Thinking laterally, Google creates APIs that can be plugged-in with other sites and hence it is a sort of glue where ever users go on the web. It's in the context of the user rather than the marketer. So, do marketers like P&G have to create CPIs, where  C stands for customers. If I was a pet owner, P&G builds a set of CPIs that can help pet owners get content the way they want.It pulls content from different creators. It's an equivalent of a  "TV remote" in the offline world. If I don't like the content, I switch it off and move to another. P&G's site needs have a lot such CPIs which consumers can use. It may be mobile reminders, email alerts, or a plug-in into my igoogle  which is an independent channel for pet owners, beauty, grooming etc. P&G has to create an open marketing platform for content developers to use its CPIs.

What do you think? To me this makes a lot of sense and seems far more relevant than creating one portal after another.

          

Experience is marketing

In s+b magazine, James Gilmore and Joseph Pine II write that:

Companies in consumer and business markets now pay more and more to reach fewer and fewer households and executive decision makers.

What companies need, therefore, is a new approach to demand creation that actually enables — make that forces — a company to be what it says it is. To borrow the phrase architect Jon Jerde made famous, that discipline is placemaking. Places are what provide the primary means for companies to demonstrate exactly what they are for both current and potential customers. Companies that embrace placemaking understand a fundamental dictum for contending with authenticity: The experience is the marketing. In other words, the best way to generate demand for any offering — whether a commodity, good, service, other experience, or even a transformation — is for potential (and current) customers to experience that offering in a place so engaging that they can’t help but pay attention, and then pay up as a result by buying that offering. Stop saying what your offerings are through advertising, and start creating places — permanent or temporary, physical or virtual, fee-based or free — where people can experience what those offerings, as well as your enterprise, actually are.

Bank Customers Say Give Me Some Respect

According to a recent survey report by Allegiance - Pulse of America Survey, there are 4 key areas banks need to engage with customers.

Helpful Service:  Customers like doing business with a bank that saves them time and money. Banks have focused on wait times, and overall, they are meeting customer expectations. But saving time is not limited to waiting in line. For example, online banking services should be easy to use and understand, which creates a strong avenue to build engagement.
Clear Communications: Customers are reluctant to rely on banks for unbiased financial information, yet they thirst for knowledge about the newest and best products and services available to them. Customers are saying you can connect with me emotionally by telling me about a product that is relevant to my situation. 
Personal Connection: Customers say that their one-on-one experiences with bank representatives (tellers, loan officers, or managers) have a meaningful effect on their engagement, both positive and negative. Banks should not underestimate the power of each one-on-one experience in building lasting engagement, and they should establish training and processes to establish best practices. 
Respect:  Banks must do better at making customers feel respected. Engaged customers cite bank reps who deliver service with speed and confidence. Dissatisfied customers cite bank fees as causing stress, which makes them feel less respected. In particular, some customers feel disrespected when banks game the system to increase bank fees wherever they can. The message to banks: Engaged customer are also savvy customers and expect to be treated fairly.

I quite agree with personal connection as an important engagement pillar, as technology is taking away personalized service from banking. Hence, banks need to identify ways of building personal connection with customers as they invest more in self-service technologies.

Customer Relationships are Conversations

There is a lovely little post by Valeria Maltoni where she tracks a post in Tom Peters blog on " What is customer relationship? " She writes:

The working definition they’ve come up with is:

A relationship is an ongoing conversation with a customer, in which the customer never thinks of you without thinking of the two of you.

Customer relationships are conversation only and if there is an unwavering commitment on the part of the company to make it so. Let’s not forget that in exchange for providing a product or service, the company gets compensation.

So far, the best reasoning I read about the whole discussion comes from Paul H in the UK:

customer relationship should be what the customer wants it to be. We want that to be a human relationship.

While it matters how we think about customer relationships and approach the opportunities we have to begin or continue these conversations with a mindset and attitude of service...