Marketing

  • September 15, 2009

    • I saw this on the Huffington Post and thought it said a lot about CRM.  A California woman has refused to pay her bill for a credit card she has with Bank of America.  According to Huffington Post, Ann Minch “has carried a balance of several thousand dollars on her Bank of America credit card, making minimum monthly payments of about $130, sometimes paying and extra $50 or $100.  She says she’s never missed a payment.”

    Minch’s beef is that for all her good behavior and customer loyalty the bank repeatedly raised her interest rate this year, reaching 30 percent in July.

    It gets better.

    Minch decided to make her fight with the bank public and posted a four-minute video on YouTube to explain her actions and to demand the bank negotiate and reduce her rate.  You can see the story here.

    Minch is not alone, especially in these hard economic times.  Many people carry balances on their cards and pay monthly interest.  Banks are only too happy to carry the balance and collect the interest because at 15, 20 or even thirty percent interest it doesn’t take long for the borrower to pay the bank more than the original card balance.  For banks, card balances are the gift that keeps on giving.

    According to creditcards.com as of June 30, 2009 Bank of America was the number two general purpose card issuer ranked by outstanding debt ($150.82 billion).  In 2008 BofA was number three for cards in circulation with 80.2 million and based on outstanding debt in 2008 it was number two with 19.25% of the market.  It was also number two in profitability in 2008 earning $520 million in profit.  Interestingly according to J.D. Power and Associates 2009 Credit Card Satisfaction rankings Bank of America was tenth with a score of 687 out of one thousand.

    Credit cards are a form of unsecured loan with the key differentiator being the loan originator.  It’s you and me, not some loan officer.  The banks can’t walk down the hall to tell you to stop making silly loans to yourself all they have is the interest rate lever to do that with.  So to influence behavior, they jack up the rates they charge in the hope that you’ll stop charging until you get your income and expenses in line.

    The difficulty comes when money borrowed at one interest rate is suddenly assessed a higher rate.  It’s like moving the goal posts and paradoxically, if you had trouble making a payment at 15 percent, 30 percent will not be an easier climb.

    Lest you think that the bank has all the leverage here consider this.  Minch says in her video that she owns no property and was laid off.  There’s nothing that the bank can do to compel payment — they can’t seize her home or car and the bank can’t garnish her pay.

    The bank can and probably will take her to court but as she correctly points out in the video, the civil courts are backlogged and it could take years to get the case heard.  Meanwhile she rails against Bank of America and all banks that have received federal bailout funds from the people of the United States and then turn around and treat their customers the way she has been treated.

    It looks like a Mexican standoff but it could turn into a circular firing squad because Minch’s goal now is not simply to get the bank to reduce her interest rate — she wants to spark a revolt against big financial institutions and in the video refers to them as “evil, thieving bastards”.  So far her video has been seen about a hundred thousand times.  It’s going viral thanks to social media and it points to the importance of every vendor having good policies and procedures in its CRM strategy (not just tools, strategy) to avoid this kind of nightmare scenario.

    Published: 15 years ago


    Last week I made the suggestion that we have over done our reliance on customer experience as a customer intimacy tool — something that I stand by.  The idea of customer experience looms large and there is no denying its power as a theme in CRM.  But if our interpretation of customer experience is off the mark, as I think it is, then what is the right approach?

    First, by way of review, customer experience has come to mean a literal experience had by a customer with a vendor, product or service rather than a product or service cultivated — through value add — to be an experience.  The customer experience as we know it today is a method of establishing customer intimacy and it is only one of several intimacy strategies that we should consider using — along with product line extension, product enhancement and marketing.  All of the other intimacy strategies require some greater knowledge of the customer, especially understanding customer attitudes, which can be gained through communities and other social media whose focus is information gathering rather than message or idea elaboration.

    What separates customer experience, in my mind, from other intimacy strategies is that all the other strategies deal with “the thing itself”, either a product or a service.  Customer experience is a meta-intimacy strategy because it operates at a level of abstraction above the thing itself.

    It strikes me that when we talk about the customer experience, what we really mean is our service-product.  That might seem like a distinction without a difference but it is not.  The hyphen between service and product is deliberate.  In conjoining the words it emphasizes an idea that might not be strange to us but it is often subliminal.

    Customer experience, is generic, a thing to be achieved through prescribed processes within an organization, an outcome with few inputs.  A service-product on the other hand, is more open-ended.  It takes whatever shape a customer gives it and it is different from brand to brand, person to person.  A service-product also has this key difference from an experience — it captures or ought to capture customer input well beyond the hoped for conclusion of satisfaction.  A well-executed service-product looks for root causes, captures data and influences future company decisions about product and brand.

    Replacing a customer experience orientation with a service-product idea will do several things for any company.  As I have tried to say elsewhere, the current description of customer experience amounts to little more than the “ordinary care” that hotels owe guests.  But no one competes on ordinary care because it is so easy to supersede.

    We try to develop customer experience as a way to differentiate and while that may be a good thing, some products and services simply cannot be cultivated into customer experiences.  Consider root canal.  It is a service that will never be cultivated into an experience — except for the pain killers as one experienced patient told me recently.  If we attempt to convert a service like this into a customer experience we run headlong into a wall.  Far better to look for ways to improve the service product than attempt to make it something it is not.  Also, since only some services can be cultivated into true experiences, it can relieve managers and line of business people from the contortions necessary to attempt to achieve a customer experience.

    A true service-product orientation is an instant differentiator.  Like any other product, a service-product can be differentiated based on customer input.  In contrast, a pre-determined customer experience is a playbook to be executed and the customer is almost a by-stander.

    The good news is that many companies already approach the customer experience as a service product and they are highly successful at knowing their customers as well as ensuring their satisfaction.  Notwithstanding this success, I believe it is critical to get our terms right, to focus on the service aspect rather than sticking to the literal meaning of experience.  If we fail to get our terms coordinated we risk ignoring real opportunities for innovation in our businesses.  And at some point an ossified customer experience idea will fail to meet the needs of those whose need is for service-products.  When that happens we will wring our hands and ask how and why CRM failed us.  Of course it won’t be CRM that failed but our vision.

    Published: 15 years ago


    This spring and early summer have been fertile times for social media and CRM.  The traveling shows, Sales 2.0 and Enterprise 2.0, made stops here and each had some interesting ideas on offer.

    For sheer completeness I tip my hat to Enterprise 2.0.  If you are wondering what the Enterprise 2.0 fuss is about it’s considerable and it relates directly to social media and ultimately to CRM.  Netting it out is difficult but here’s an attempt.

    As corporations flatten out some of their decision making authority goes down closer to the customer and some of it evaporates to be reconstituted on the customer side.  Rather than a traditional command and control or hierarchical organization structure we end up with something more like a network.  Social CRM is the front office analog.  Social CRM aims to have more direct conversations with customers rather than attempting to tell them what to do.  You could get all of this from a wonderful book, “The Cluetrain Manifesto” published in 1999.

    As is typical of big concepts, it took about ten years for the seminal ideas in “Cluetrain” to percolate to the market.  But now that the ideas are here they are leveraging things like twitter and Facebook and other sites to remake the corporate landscape.  Beyond that they have the potential to remake our lives too.

    With all of this as background, I have been thinking about the implications for CRM for a long time.  What might seem intuitively obvious may not be and there are many ideas lurking that have not bubbled up yet.  For example, you might think it’s a slam dunk that social networking would make for a great conventional marketing tool but there I think you’d be wrong.  Some people are advocating for social media as if it was e-mail on steroids.  Sure, you can reach a heck of a lot of people for zilch with social media but there’s reach and then there’s reach.

    In truth social media is about intimacy built on trust which is why spam doesn’t work with e-mail and why trying it with social media will be a colossal flop.  But social media is good for marketing and sales if you — the marketer and the seller — can build trust over time and become what I refer to as thought leaders.

    In a revision of Andy Warhol’s famous dictum that in the future everyone will be famous for fifteen minutes, someone (wish I knew who) recently said that with social media everyone will be famous to fifteen people.  That’s pretty clever and it goes to the heart of thought leadership.  Think of your Facebook friends and your twitter contacts and there are probably more than fifteen people on your list but  the number is small by cosmic proportions and that’s the point.  You are, to one degree or another, already famous to a tight circle of people, some of whom you know well and others you hardly know at all.  But they respect you and your opinions to some degree and that’s probably much more than they know or respect some corporation or politician.  You can use this in business with social media.

    The challenge for sales and marketing is to learn how to tap into these circles of trust without violating anything or anyone.  We know this intuitively and it’s why spamming won’t happen in social media — it will not be tolerated.  With that in mind the new model for selling is leveraging social media to disseminate thought leadership.

    We already know that people think about and discuss purchases with their friends and acquaintances long before they enter a sales process and the trick will be for sales people to be seen as truthful sources of authoritative information in their own territories.  Thought leaders, in other words.  That’s not easy but it can be done, but it can’t be done using old methods.

    How often do you get links to things on the Internet and what are those links for?  There are many links for articles but increasingly those links lead to other media like pictures and video.  I think that is a big hint.  The modern sales glossies, white papers, brochures and Powerpoint slides are all of another time — the era of hierarchical command and control.  The era of broadcast advertising.

    My hypothesis is that much more of this material will find its way into low cost and easily produced video and ultimately I would not be surprised if it also included music.  Your favorite TV shows have theme songs so I don’t think this idea is that far fetched.  (I also have two kids in music school who will need jobs someday.)

    Taken as a whole I think this gets us to the idea of selling thought leadership.  You can’t expect to sell anything until you have convinced the customer of the correctness of your line of thought.  Today too many vendors are letting random chance do the educating.  That’s going to change.

    Published: 15 years ago


    Manticore Technology is a company in Austin, TX focused on simple, powerful and easy to use demand generation applications delivered in a SaaS or on-demand scenario.  I have liked this company’s approach for a while now and they are one example in a good-sized market full of similar innovative companies such as Eloqua, Market2Lead and Marketo.

    Today Manticore announced a global partner program and if that was the whole story it would not be worth comment.  But the company did something clever that I have long advocated and it therefore gives me more reason to write.

    In addition to the expected partner program that enlists resellers, Manticore went out of its way to design another level of partnership at the consultant level.  According to the press release, the consultant partners will use the application to help end-customers with their sales and marketing programs including “strategic services such as marketing-sales alignment, sales pipeline optimization and nurturing campaign design in conjunction with Manticore Technology.”

    Consultants have done this kind of thing for a long time but in many cases, without the explicit blessing of the vendor and in small geographies.  Developing this kind of partnership provides Manticore with extended reach into the market and helps ensure customer success.

    A few years ago I wrote about this kind of partnership being an eventuality when I described WebNecessary technologies.  A WebNecessary technology is one that embeds the Internet more deeply in the solution than simply providing a transport mechanism.

    As I wrote at the time (2004):

    Web Necessary (WN) applications … actually integrate the Internet as a part of the value proposition delivered to customers and differ from earlier hosted applications in several important ways:

    • They involve the Internet as an active part of the value proposition.
    • They support innovative business processes that in most cases could not be easily supported any other way.
    • They are collaborative, bringing together people from disparate roles, geographies and organizations to participate in these business processes.

    The logic of the situation is apparent.  As more vendors move to deliver their applications on-demand, there is an iron mandate that they make the applications drop dead simple to use, modify and maintain.  That’s not good news for traditional consultants who make a lot of money on nuts and bolts issues.  But it opens up another important field.  As applications became more configurable and as new WebNecessary applications began doing things people had not though about much before, the need for expertise to help people actually use on-demand applications began to grow. 

    Manticore’s program has some interesting points.  For example, the on-demand nature of the product makes it possible for consultants to live and work long distances away from their customers.  That might not seem like a lot but it goes to the heart of the third bullet point.  Now, even small companies can access the services of ninja consultants regardless of location.  That’s always been technically true but rarely has it been as easy.

    Manticore’s announcement today really traces a five year trajectory from issue identification to solution and it succinctly points out the power of multi-tenant on-demand computing.  It’s necessary, it’s good to see and I expect we will see more announcements like this one in the future.

    Published: 15 years ago


    Happy New Year! Let’s be counter intuitive for a moment, shall we?

    We’re in a recession and we all know it. Traditionally (and sadly) in an economic downturn when companies seek to lower their expenses they cut their marketing budgets, and why not? Marketing costs money and if you believe your marketing messages will fall on deaf ears in a slowdown, then you certainly won’t want to spend money on marketing programs so cutting marketing makes sense.

    Before you run out and fire everyone or slash the budget to the point that stamps are rationed by the CEO, consider something else. Marketing is essential to promoting your ideas and even in a recession, promoting your ideas is a powerful tool for doing business now and down the road.
    Slashing the marketing budget might have been a reasonable idea back in the last big recession—the one that happened before the fax machine was big news—but in today’s world, with fabulous communications and dirt-cheap ways of reaching people, it makes sense to think twice about marketing cuts.

    There are three things that marketing—alone or in conjunction with sales—can do to help you make the downturn as shallow as possible for your bottom line. In no particular order, they are: spreading your thought leadership, showing your customers that you are involved in their success a.k.a. doing the right thing and building communities that will drive your inevitable upturn.

    Thought leadership

    So your customers aren’t buying more of what you provide. They bought from you once because they think you are the best at what they need you for and you want them to keep thinking that way for two reasons. First, if you manage to provide them with ideas for maximizing their business with and without the use of your products and services you’ll at least get to the point where they place a replenishment order. Also, keeping the customer’s mind occupied with thoughts of you will keep them from looking around for brand X because it’s cheaper.

    Do the right thing

    More importantly, though, sticking with your customer by showing you understand and are involved with their success is a great way to build bonds and to show them concretely that you are the real deal. Historically, sales people were almost exclusively relied on to provide the thought leadership and show involvement but two problems come with that approach. Sales people sell, which is tactical, they aren’t great at the thought leadership and doing the right thing because these are strategic activities. Stopping by with donuts might be the closest a sales representative can come to being strategic, but how many times can that work before the customer gets fat or annoyed or both? No body likes to have to say ‘no’ as in “No we aren’t buying that today” so don’t make them say now when it’s just as easy to get them to say ‘yes’ to becoming involved in a community.

    Building communities

    Now is a great time for marketing and sales to work together to build customer communities. A good community takes a bit of time and effort for the organizer and for the attendees and while no one would like to admit it, in a slack period, time is something we all have in a bit more abundance.

    What does a community do? It brings together customers on a periodic basis—once or twice a month—to trade ideas about current use and future need. Smart sales and marketing people will look at a community as a laboratory where they can test ideas for products and messages, and to just listen.

    Communities are gold in a slump because they enable customers to share the Kool-Aid, which is a natural thought leadership conduit. Communities also give the customer better insight into you and your products and, if you are doing your thought leadership job properly, they set the stage for your recovery by identifying needs for existing products and services as well as needs for new ones.

    Marketing departments are the natural and rightful places for much of this activity and married with effective sales representation they can do a lot to keep the valley of a slump from turning into a crater. So while you might be thinking about cutting your marketing budget, also consider how you can redeploy some of those resources to prepare for the upturn.

    Published: 15 years ago