Insight Data Group Blog

Creating Customer Value in a Down Economy

Bryan Bennett — 2008-06-25T03:53:00Z

In a challenging economy, many organizations incorrectly choose to arbitrarily cut customer marketing programs to preserve income levels. In actuality, the better strategy would be to invest in your customers to make your customer portfolio stronger now and in the future. This is when an organization should be identifying, understanding and catering to your best and high potential customers thus increasing their value to your organization. You still spend less, but it is skewed toward your better customers. If you don’t, your competitors will be targeting and possibly wooing your best customers during the slow economy and immediately afterwards in the recovery period.

The first step is to define customer value for your organization. Whatever the definition, it must be consistent and quantifiable over a long period of time. Many companies use customer profitability, which is helpful for a short-term view of a customer since profitability is a ‘snapshot’ of the customer’s value at some point in time. It does not account for the value of a customer over the life of their relationship with a company. Additionally, there is always the argument of how much overhead to burden each customer account with. Some organizations allocate the entire company or division’s overhead to each account while others have allocated only customer servicing costs. I tend to prefer the latter since it more accurately reflects the cost of doing business with your customers.

Lifetime value is probably the best definition of customer value because it views customer’s value over a long-term relationship. Lifetime value is the expected value (or profitability) of the customer over the length of their expected relationship with the company. If product stages or lifestages are applicable to your organization, then they should also be included as a dimension of lifetime value. For instance, if you know your customers progress from the low margin product or service A to the high margin product or service E, losing a large numbers of customers when they are at the product D stage can be detrimental to a company’s stability. In the banking industry, the lifestages a customer typically goes through is from single, to married, to children, to college for children to retirement. During each lifestage, a customer will have specific product needs. Demographic data will be necessary to supplement your transactional data for this analysis.

Applying your definition of lifetime value to all of the customers in your portfolio will enable the company rank order customers to identify their best customers and their high potential customers. A further analysis of these groups will yield a better understanding of their needs and their relationship with the organization, i.e., how they purchase, how often they purchase, etc., enabling the company to treat and communicate these customers accordingly.

Increasing customer value is first a matter of motivating these customers to maintain the value they currently have with your organization to a positive customer experience enabling you to retain them. The next part of the strategy is to motivate them to either increase your share of wallet by purchasing more of the same products; to upsell by purchasing higher margin products; to cross sell by purchasing other products sold by the company; or improve their loyalty by increasing their propensity to buy your product or service – maybe not now, but in the foreseeable future.

By focusing on improving your relationship with your best customers, instead of cutting marketing programs across the board, your organization will be able to increase the value of your customer relationships in a down economy. These are the customers who make the greatest contributions to your organization’s income in the short and long-term. Your best customers are also the ones your competitors will be going after now and when the economy turns around. By focusing your marketing strategy on your best customers during a slow economy, an organization can save overall marketing dollars, while continuing to increase value.

This targeted marketing strategy can also be applied to customer acquisition programs. Given that you know what a good or high potential customer looks like, use some demographic analysis to determine who in your prospect pool has the same profile, or potentially will have the same profile. Through better targeting, clients have been able to reduce their mailing costs significantly while increasing their response rates.

This strategy will also work whether your business is business-to-consumer or business-to-business. In fact, some of these strategies work better for B2B since it is sometimes easier to determine the lifestage of a given business.

I hope you enjoyed this discussion. If you have any questions, please send them to me directly or post them on our blog. If you need further assistance implementing any of these strategies, please call me at 847-821-0975, so that we can help you.

The Subtleties of Selling Services and How to Recognize Them

Kendra Lee — 2008-06-24T12:48:00Z

My company has the opportunity to work with a number of outstanding sales professionals who are excellent at selling products. They understand the sales process and excel at getting customers to buy specific products and solutions. Many companies hire these superstars thinking they will help their services business skyrocket at the same pace the product sales would. However, they quickly learn that there are subtle, very important differences, when it comes to selling a company's services versus their products. Many of these differences are so subtle that even the most knowledgeable and high powered sellers can't see what they're doing wrong. Unfortunately, it can take a very long time for a company to recover from these uninformed approaches.

One of the key differences with services selling is the type of relationship you must establish with the customer. As is often the case with product selling, it's not enough to make the sale and then move onto the next opportunity. A relationship of sustained trust and respect must be established, something that is only accomplished by maintaining contact with the customer, making suggestions and recommendations that demonstrate the value of the relationship. By serving as a consultant, and proving the value of the relationship on a consistent basis, a customer will invest in your service offerings.

Unfortunately, some customers use their own subtle signs to tell a seller when they are not being successful in the services arena. Experience tells customers that if they sign a purchase order agreement for services, the high-powered, pushy product seller, who is looking for a quick sale, will likely leave them alone. This seller is not focused on making recommendations and finding services that will benefit the customer's unique business needs. Once the PO is signed, the customer knows they don't have to spend against the PO. So they sign; then make excuses for not using the services they did not need in the first place. The downfall here is that when the customer eventually does need services you provide, they will likely find a way to service themselves internally, or look to another provider. They will not engage the high-powered, pushy product seller, not only leaving money on the table, but reducing the company's share of the customer's business, and destroying customer satisfaction.

Whether a customer is disinterested in services or doesn't need them at the moment, it's up to you to serve as a consultant and provide ongoing advice based on their experience serving the business needs of the organization. This level of activity will earn respect from the customer, and drive the customer to want to work with you when the right opportunity presents itself.

In order to become successful at selling services, there are several key subtle considerations. The following are a few to remember:

Discuss problem areas before needs

Work early in the customer's buying process to identify those problem areas

Test recommendations before making a proposal

Services have a "shelf life" that expires as time passes and supply is limited

As a way to achieve success selling services, it's a good idea to start with existing customers rather than new prospects. Existing customers already have a level of trust and respect for you, and are more than likely willing to listen to your services message while you learn to perfect your sales approach. Prospects have no established relationship with you, and often find an inexperienced, high-powered seller too pushy. They won't be nearly as flexible or forgiving if you make mistakes when selling services for the first time.

Selling services is much different than selling products. While the goal of making a sale is the same, a much more consultative, coaching approach is required. Without it, a customer won't be inclined to implement or maximize the value of your services.

Kendra Lee is author of "Selling Against the Goal" and president of KLA Group. Specializing in the IT industry, KLA Group helps companies rapidly penetrate new markets, break into new accounts and shorten time to revenue with new products in the Small & Medium Business segment. Ms. Lee is a frequent speaker at national sales meetings and association events. For more information, contact the company at +1 303.741.6636 or info@klagroup.com or visit www.klagroup.com.

A Single Version of the Truth – Analytics Meets Data Quality

Dr Fay Cobb-Payton — 2008-01-28T20:28:00Z

Organizations continue to be challenged by data warehousing and integration implementations. Given the need to merge single source applications and garner the benefits of a “single” view of the truth, data warehouses serve to consolidate and streamline information flows that impact multiple constituents and offer data integration among disparate sources of data. Some organizations have turned to data marts as a prescribed way to reduce costs and challenges associated with larger scale data warehousing implementations.

Data marts are said to be a subject-oriented and organized to enable decision support for a given business unit or department. With each department (e.g., accounting, sales/marketing, production) creating, maintaining and potentially owning its own data mart, continual islands of isolation can proliferate. Such proliferation can result in myriad differences in overall organizational objectives as well architectures and designs.

Withstanding these issues, a unified truth is desirable, and this objective rests on the degree to which data quality is integrated into organizational techniques, processes and practices. Data quality requires organizational buy-in, data management practices and continual monitoring which is most effective and efficient when utilized prior to the extract, transfer and load process into the data warehouse. Data detection, completion, auditing, enhancement and standardization are but a few of the processes used by leading data quality vendors.

Data quality coupled with data integration enables organizations to engage in more informed decision-making which impacts organizational key performance indicators (KPIs). Rigorous organizational practices would include data quality assessments to capture best practices, areas that warrant process reengineering and where continuous improvement can be executed.

Organizations, such as nonprofits, significantly reply on members and volunteers for both revenue flows and service delivery. Financial quandaries can stem from employees spending hours working with member databases that contain inaccurate, incomplete and duplicate member data. Often users export data to user-friendly spreadsheet applications which is a typical practice not limited to nonprofit firms. The extracted data, however, requires modification and formatting to create needed reports for board of directors and executive directors.

The final reports may not be accurate or complete, and the decisions made from these reports can be right decisions (in terms of alignment with organizational mission) based on the erroneous data. These decisions, in turn, can impact membership services, target marketing programs and financial outcomes of any organization.

Ultimately, an initial assessment of data quality practices and processes is critical prior to technology adoption. The assessment should gather the views of multiple constituents to foster users and management buy-in and align with organizational strategy and mission. Such an assessment can drive centricity of data and stimulate user trust of the organizational data.

A Customer-Centric Approach to Community Bank Growth

Bryan Bennett — 2008-01-08T17:22:00Z

{Click here to view this whitepaper in pdf format}

Customer-Centric Versus Product-Centric

Community banks are uniquely positioned to manage their customer portfolio in a focused
manner due to the very nature of their business. The market for community bank services
is usually well defined with a majority of their customers coming from the area immediately
surrounding the bank or branches. Community bank services also tend to appeal to a certain
segment of the population. This population is not interested in all the services a national or
regional bank offers and is typically seeking a more stable, personal banking relationship.
Conversely, some national bank customers are not interested in the limited services offered
by a community bank such as limited ATM locations. This very nature makes it possible for
the community bank to outmaneuver the big banks by better targeting customers in their
community.

Banks in general tend to be more product-centric than customer-centric. Their focus is on
launching new products and services versus focusing on how they can better manage or
serve their different customer segments. If you lined up the marketing collateral and
websites from several community banks and removed the bank name from each, you would
find that the messages are very similar across the board:

"…we are focused on the community…"
"…we put the customer first…"
"…we build solid relationships…"

The challenge then becomes how to get the message heard in a crowded marketplace offering
commodity products.

Organizations that focus on satisfying the customer’s needs will not only experience growth in
their customer portfolio, but a customer-centered approach also results in superior financial
performance for the organization (Footnote 1). This study only analyzes how information
can be utilized to influence the organization’s contact strategy, but a complete customer-
centric implementation also involves computing customer profitability and developing a
behavior-based customer segmentation schema for managing the customer portfolio.

A customer-centric approach to growth varies dramatically from a product-centric approach.
Based on Jay Galbraith’s Star Model (Footnote 1) an organization is comprised of five dimensions:

Strategy: the direction the organization is headed;
Structure: where decision-making is located throughout the organization;
Processes: how information flows through the organization;
Rewards: how people are motivated;
People: the mindsets and skills of the employees.

Some of the key differences between a product-centric organization and a customer-centric one
include (Footnote 1):

Table 1 – Galbraith Star Model Product-Centric Versus Customer Centric Organization Comparison

Dimension	Concept	Product-Centric Organization	Customer-Centric Organization
Strategy	Goal	Best product for customer	Best solution for customer
	Main offering	New products	Personalized solutions
Structure	Organizational concept	Profit centers	Customer segments, teams, etc.
Processes	Most important process	New product development	Customer relationship management
Rewards	Measures	Number of new products	Customer share of wallet
		Market share	Customer retention
People	Mental process	How many possible uses for products	What combination of products is best for customer
	Culture	Open to new product ideas	Searching for more customer needs to satisfy

With a product-centric mindset so deeply ingrained in so many organizations, it’s no wonder why
many find it so difficult to make a change to become customer-centric.

For an organization to create the best solution for a customer, they have to focus on identifying
and satisfying the customer’s needs as opposed to how they can sell them a new product. This
starts with understanding who the customers are and marketing to them based on that information.
Only then can that organization deliver an effective ‘customer experience’. As previously mentioned,
this will result in improved profitability as the organization develops a deeper relationship with the
customer which leads to more products/solutions purchased. Additionally, the organization will
benefit from lower acquisition costs since marketing would be better targeted based on prospects
likely to respond to the message and not just anyone who lives and breathes. Lastly, the
organization will enjoy a longer lasting customer relationship since it would be focused on satisfying
that customer’s needs versus selling them a new product.

Customer Location Analysis

This study includes data and analysis from the metropolitan Chicago community bank market.
Chicago is a unique market at this time for several reasons:

it has one of the highest community bank growth rates in the United States;
there is a high incidence of national and regional banks also entering the market;
the market is still considered ‘underserved’ by several banking groups.

Consequently, the marketplace is focused on attracting new customers by offering ‘Free
Checking’ and other low/no margin products and services as the primary acquisition tool.

Branch Proximity Analysis

The first step in this process is to understand how community dependent the community bank
is. To discover this, a branch proximity analysis was performed. This analysis will determine what
percentage of the branches customers are located in their immediate and adjoining zip codes.
We utilized a stratified sample of zip code data for 10 branches of a community bank. For the
bank we studied, and based on conversations with other banks, most of a community bank’s
customers are concentrated in the branches’ zip code or adjoining zip codes. In particular, we
found that in 8 out of 10 cases, over 50% of the customers fit this criterion. For these 8
branches, the customer concentration ranged from a low of 62% to a high of almost 99%. The
two branches without customer concentrations over 50% where still significant, with respectable concentrations of 43% each. Branches A thru E are suburban locations, while Branches F through
J are urban locations.

Figure 1 - Customer Proximity Analysis

With this information, the bank can examine the census demographic data for the branch area
and focus their customer contact based of this information. The census data can be an effective
alternative to purchasing individual level demographic data. Additionally, it will help the organization determine if further analysis is required. If the census data did not reveal any significant variances
between branch areas, then no further work is warranted. But, as in this case, the census data
revealed considerable variances, further analysis should be performed and an investment in
individual level demographic data might be warranted.

The analysis found that there are significant differences in the demographic composition of
the population in these zip codes. Some of the key variables to focus on include household
income, household size (presence of children), rent versus own and race.

Table 2 – Branch Customer Demographic Comparison

	Suburban Locations
Branch	A	B	C	D	E
% of Family Households w/Children	45%	46%	34%	39%	45%

College: Bachelor's Degree	38.30%	10.40%	7.10%	26.30%	21.40%
College: Graduate Degree	26.60%	5.80%	2.40%	12.40%	9.30%

Asian Population	6.80%	1.80%	2.20%	9.30%	1.30%
Black Population	0.60%	22.20%	0.90%	7.80%	2.00%
White Population	91.10%	65.00%	87.20%	77.50%	92.80%
Hispanic Ethnicity	2.90%	14.00%	9.30%	8.80%	6.00%

Median Household Income	$114,964	$48,337	$42,917	$62,944	$69,639
Per Capita Income	$52,397	$19,016	$18,341	$26,435	$27,030

Income Households by Income
$150,000 - $199,999	14.70%	1.50%	1.50%	3.60%	3.50%
$200,000 +	21.00%	1.20%	0.40%	2.60%	2.60%

Owner-Occupied Housing Units	91.50%	62.30%	73.50%	68.10%	82.60%
Renter-Occupied Housing Units	6.40%	32.40%	23.10%	29.00%	12.80%

Median Owner-Occupied Housing Value	$383,445	$120,696	$132,293	$159,515	$168,589

	Urban Locations
Branch	F	G	H	I	J
% of Family Households w/Children	11%	37%	32%	19%	20%

College: Bachelor's Degree	44.20%	18.00%	7.80%	23.70%	24.20%
College: Graduate Degree	34.00%	10.00%	3.40%	15.10%	15.00%

Asian Population	3.70%	17.20%	0.70%	13.40%	12.50%
Black Population	4.80%	3.90%	8.00%	19.20%	18.10%
White Population	87.60%	55.50%	82.80%	52.90%	54.10%
Hispanic Ethnicity	87.60%	55.50%	82.80%	52.90%	54.10%

Median Household Income	$69,311	$40,212	$45,151	$33,264	$34,495
Per Capita Income	$63,791	$17,321	$19,604	$22,217	$21,027

Income Households by Income
$150,000 - $199,999	7.20%	1.20%	1.20%	1.80%	1.00%
$200,000 +	13.70%	1.80%	0.60%	1.70%	1.40%

Owner-Occupied Housing Units	38.60%	30.30%	76.20%	22.50%	30.60%
Renter-Occupied Housing Units	57.10%	65.20%	21.30%	71.40%	64.10%

Median Owner-Occupied Housing Value	$348,495	$199,033	$137,593	$184,177	$140,392

An examination of the census data reveals variances that should impact on a bank’s
communication strategy, customer management strategy and acquisition strategy. We’ve
highlighted the highest and lowest values for each data element. A discussion of how this
information might impact strategies follows:

Households with Children – Since bank product purchases are largely driven by
lifestage events, it would make sense to communicate with the customers from
Branches A and B about college funds versus customers from branch F or I.
College Degrees – Customers with college degrees tend to earn more and conse-
quently will likely be more interested in CDs, retirement funds, etc.
Race – The marketing collateral, communication pieces and website should reflect
the racial diversity of the bank’s customers. Creating marketing collateral for individual
branch areas is probably not cost effective, but digitally printed communication pieces
can be targeted to the population in the area.
Income – It should be no secret that a customer earning over $100,000 per year
is going to be interested in a different set of products than a customer earning
under $50,000.
Owner versus Renter Occupied – Renters will be at a different lifestage than a
customer or prospect that owns their residence. Therefore, the products/solutions
they will be interested in purchasing will be different.
Housing Value – Again, the customer with a $350,000 home is not typically looking
for just a free checking account.

Share of Wallet

This data can also be used for a high-level share of wallet examination. For example, if a
customer only has a free checking account with your Bank A and the customer is located
in an area with high housing values, high income earners and high concentration of children,
that customer either hasn’t begun preparing for the rest of his/her life or their other accounts
are with other banks and financial institutions. It is up to the banker to find out which case
is true. Under either circumstance, it represents an opportunity for the bank. This is especially
true for long-term customers who haven’t gone past the original free checking account. Their
money is probably in other institutions.

Next Steps

This is an example of how a little bit of information can be very powerful if put in the right
hands. The proximity analysis is not very difficult. Start with a sample of data and if the
direction of the data supports customer concentration, then complete the analysis for the
entire customer population. Once concentration can be verified, use the free census data
to compare the demographics of the populations around the branch locations. Use the
demographic data to find the attributes that "stick out" or aren’t consistent with the data
around it. With this information, the bank can begin crafting communication strategies that
better fit their target audiences. This entire process is quick and inexpensive.

With this information as a solid foundation, the bank is on the path to customer-centricity.
Customers tend to spend more money at places they have an affinity to. Therefore, several
actionable can be taken by the bank, including:

changing the marketing collateral to reflect the diversity of the population the bank
serves;

changing the pictures inside the branch to reflect the population the branch primarily
attracts;

changing the website to reflect the population diversity and/or create customized
landing pages and microsites that reflect the branch’s population demographics;

with the availability of digital printing, customized mailing pieces can be sent to
each branches customer population;

understand the cultural differences of the population the branch is serving and cater
to them. For instance, some ethnic groups treat going to bank as a family event and
will bring the entire family in just to open a checking account. That represents a great
opportunity to not only sell additional bank products/solutions, but also have staff prepared
to capitalize on the situation with gifts for the children for example.

Next, is a deeper ‘dive’ into the data by examining customer profitability and segmentation.
With a thorough understanding of who your customers are and which ones are more profitable,
the bank can become a finely tuned, information rich customer-centric organization.

(1) Galbraith, Jay R. Designing the Customer-Centric Organization: A Guide to
Strategy, Structure and Process. Jossey-Bass, San Francisco, CA (2005)

{Click here to view this whitepaper in pdf format}

When a Pair of Twos Beats Four Aces

Bryan Bennett — 2007-02-22T02:46:00Z

Excuse the poker analogy, but no matter how much a company spends on customer management programs (4 aces), the fate of how a customer or prospect perceives an organization can come down to a single, or series of customer experiences (pair of 2s) – good or bad. Companies have spent millions of dollars on state-of-the-art data-driven customer management systems (CMS). The Gartner Group recognized my thought leadership on this when I was working for another CRM consulting firm, which states that it’s not just about changing technology, but people and processes must also be changed.

This is a personal article about my experiences with several organizations. There are no statistics to support my conclusions, but customer treatment by an organization usually operates in a limited range. I have become very observant over the last several years on how companies treat their customers and will regularly write notes to management – good and bad. After experiencing a series of customer experience delights and blunders, I thought I would summarize this in an article for my readers.

For simplicity the companies have been categorized as the Good, the Bad and the Ugly (excuse me Clint Eastwood). There is also a Superstar category for a company that breaks the mold when it comes to positive customer experiences. The categories are addressed in reverse order so that we can end on a positive note.

UGLY

There’s a certain telecom company that grew up, was broken apart and most recently has reassembled most of the pieces. When AT&T was just a provider of long distance service I was one of their best customers. At the time, I was a partner in an international business consulting firm and was racking up a lot of international calls. They went as far as to send me a free Directv satellite dish with free pay per view movies for a year. More on that later.

When my wife started her business out of our house a few years ago, I set up the additional phone lines since the current service was under my name. There was a problem with her billing, prompting a phone call asking her when the bill would be paid. The bill had already been paid some time ago. The agent didn’t believe her and called my wife a liar in so many words. The next day all 3 lines were switched to MCI. When she moved out of the house and into an office the next month, all 5 lines used MCI. When she moved into a bigger office a year later, all 5 lines and the T-1 were with anyone but AT&T.

Not only did they lose the direct revenue from the Bennett household for many years, but they were my poster child for what not to do during the dozens of marketing seminars I delivered over the next several years. They only got back into our house after they purchased another company we were already doing business with.

How could a company with all that data not know better. This could have easily been avoided by grouping all of the accounts under one account history, especially since the disputed account was at a residential location. Isn’t that called householding? Most importantly, you never resort to calling or insinuating that the customer is lying.

BAD

When I first started my firm, I was looking for vehicles to market my services. I discovered infoUSA’s SalesGenie at a tradeshow. They came to my office for a demonstration. I thought it was adequate and the price was reasonable. I was also able to get a 90-day out clause added to the 12-month agreement. Once I started using it, I didn’t find it as user-friendly as they portrayed. This was further acerbated by crashing my hard drive and having to recreate my 1000 names test mailing, 20 names at a time.

On day 58 I contacted them by e-mail and phone stating that I wanted out of the contract, but they continued to debit my account for another month. According to them, a 90-day out means you have to pay for 90 days before you can get out of the contract. I’ve heard of creative accounting, but this sounds like creative law to me. I could have won if I went to court, but the amount was too small to justify the legal fees. I even complained to the regional manager who was going to get back to me on my refund – I’m still waiting.

To add insult to injury, they continue to ‘spam’ me with their ‘Sales Tip of the Day’ e-mail after I’ve unsubscribed from the list 3 times.

GOOD

There are several experiences that fall into this category but I only have room for a couple.

Staples – I couldn’t believe how friendly and helpful the people were when I walked into one of their first stores in Chicagoland a year ago. I was welcomed by the customer service clerk and asked if there was anything they could help me find. When I had a question in another part of the store, the employee stocking shelves in that area was very eager to help. I had to visit 5 different stores multiple times before I concluded that customer service must be a corporate philosophy. I verified that conclusion when I happen to meet the store manager and regional manager at one of their stores. Granted they have a rewards program, but that clerk doesn’t know how much or how little I spend at their store. Since I shop at multiple Staples, they don’t even have a chance to recognize me. Additionally, I stood near the entrance and observed other customers walk in and receive the same customer experience.

Directv – As I mentioned earlier, I received our first Directv satellite dish through an offer from AT&T several years ago. Too bad AT&T didn’t learn customer service from them. We only have a couple of premium services, but have been a customer for almost 10 years. Each year they call to offer us the latest technology as an upgrade to our current receivers at the same deal they give new customers. The only catch is that I have to agree to 2 years of service. Like I told them one time, “I’ve been with you for 10-years now, where am I going?” When I have a problem, my calls are expedited and they always state, “You are one of our best customers”. That’s how technology is supposed to work.

SUPERSTAR

There is only one company that can motivate families to save up for years just for a few days of ‘Magic’. This same company boasts a customer retention rate of over 70 percent. They are the largest single-site employer in the United States. Yes, I’m talking about the “happiest place on earth” – DisneyWorld. My family had the pleasure of spending a week in Orlando in 2004 with our young children. The level of customer service in and around the park is unmatched by anything else I’ve seen. From the characters, to the store clerks to the janitors, everyone smiled and was genuinely interested in making sure we had a good experience. We had the extreme pleasure of being asked to be in a parade in the park. This took us behind the scenes a bit where we observed the maintenance man greeting each family enthusiastically as he walk past the floats. Disney is serious about not just giving customers good experiences, but great experiences. According to Be Our Guest: Perfecting the Art of Customer Service by the Disney Institute, “Quality Service means exceeding your guests’ expectations and paying attention to detail.” Many organizations do one or the other of these principles well, but few get both right.

You might think that all resorts operate the same way in Orlando, but we also visited Universal Studios and Sea World and didn’t come close to the same experience. The closest we came was at the Swan Hotel, which is on the Disney property, but operated by Starwood. The people there were also great.

SUMMARY

At first glance you might say that you don’t really need a data-driven customer management solution to provide good experiences since the Staples and Disney can’t possibly use that to manage daily customer interactions on such a large scale. In actuality, they opposite is true. These companies use very sophisticated data collections programs that let them understand how a clogged toilet impacts the customer experience (Believe me; I saw it in action at Disney. Write me if you want to know the details.). As I’ve stated in a previous article which was published in DM News, data centricity leads to customer centricity. (article link) But no matter how much data your collect, the first step to any good customer experience is a commitment to ‘exceed a customer’s expectations’. It sounds easy, but so few companies make the effort to do so. Just meeting expectations would be a welcome change for customers of many organizations.

The Worst Thing about Best Practices

David Panitch — 2007-02-22T02:11:00Z

By David Panitch, Results Technology Group

A colleague asked me to review a client proposal and, at first glance, it looked like a winner. The proposal was short, and it laid out the client’s problem in clear, crisp language. Plus, the team was a great match for the project. I thought, how refreshing—a jargon-free, informative proposal.

Then I read the section describing how the team planned to complete the work and groaned inwardly: the project approach was to rely on the use of “best practices.”

“You don’t really mean this, do you?”

“Look, the client says it right here in the request for proposal,” my colleague said. “They asked us to bring best practices to the project. We won’t win the work without them.”

I resisted the urge to scream.

Few consulting “tools” are more widely abused these days than so-called best practices. It’s no wonder most banks, supermarkets, airlines, retailers, and consulting firms look astonishingly similar—they’ve been busy copying each other’s best practices for decades.

What’s most alarming is how ingrained their use has become in the language of consultants and clients. Best practices have joined the long list of meaningless phrases like scalable strategies, seamless integration, and transformational initiatives.

It’s a rare project team that doesn’t roll out the best practices—or that closely related cousin, performance benchmarks. Best practices have become a corporate trump card because they supposedly show the best way to do whatever needs to be done.

Of course, there is value in learning from the experience and success of others. It’s natural for the business community to recognize the innovative solutions or services an organization comes up with to untangle a problem or create a market opportunity. Many organizations are saddled with similar challenges, so copying may seem like the ultimate shortcut to salvation.

United Airlines, for example, saw the potential in what low-cost airlines were doing, so its executives created a new airline, TED, which is a carbon copy of their low-cost competitors’ best practices.

What’s wrong with this picture?

The problem with best practices is this: that approach lulls people into thinking that a best practice really exists that can be successfully transplanted.

Starting any project with a canned solution stifles the innovation clients pay consultants to provide. When you import best practices, the team’s thinking immediately focuses on how to do the work, rather than first addressing what should be done and why. If you start with a pre-determined solution, it’s easy to gloss over more innovative approaches.

Granted, best practices can jog your thoughts and maybe even inspire you. But as a tool for guiding strategic initiatives, it’s a real loser. One company’s best practice can too easily become another company’s sunk cost.

Here are four reasons you should dump best practices:

They rarely work. A company’s best practices work in the context of its business processes, culture, systems, and people. Plucking a best practice and trying to graft it onto another organization will produce unpredictable results.

In one instance, a company forced its entrepreneurial salespeople to adopt a tightly controlled sales process, with automated tools for all large accounts. The company mandated the new process and system because it was touted as a best practice in sales force management. After a year of trial and error, the company’s salespeople dumped the tool, complaining about declining sales productivity. For the company, it was a multi-million dollar mistake.

It’s a follower’s strategy. In an era of demands for innovative products and services, why give your clients recycled answers? A client that really wants a customer order process that looks like everyone else’s is likely to lose the battle of market differentiation. Relying on best practices will doom your clients to mediocrity in the long run.

Change comes from within. People rarely respond well to implementing some other company’s ideas. In fact, having best practices come down from on-high usually causes resentment. Let people create their own solutions using their in-depth knowledge of the company’s customers, suppliers, employees, and processes. That will result in ownership of the ideas and determination to get results.

They don’t come with a manual. Business books and benchmark reports are full of snippets about best practices, yet they rarely explain what to do with them. You may have read that it’s a best practice to process a customer product return in 24 hours, but there’s little guidance for meeting that objective. It’s also quite possible that the organizational change necessary for your client to achieve the goal isn’t even remotely feasible.

So now what?

On your next project, ask your team to put best practices aside, at least at the outset. Direct the team to thoroughly explore what needs to be done and why, before jumping to the question of how you will do it.

Pull out the best practices only after you’ve come up with preliminary ideas for solving the problem. Maybe they will spark concepts you can adapt, and maybe not.

Develop your own best solutions to fit the context of the client’s business. Use another company’s best practices only as a last resort.

A Business Intelligence Program is a Necessity Not a Luxury

Bryan Bennett — 2007-01-29T21:04:00Z

Published in DM News Essential Guide to Lists, Database Marketing & Data Services, January 17, 2007

The business intelligence (BI) train is leaving the station. If you are not already implementing a BI solution, planning to implement one or have completed an implementation, you risk being left behind. BI is something that you cannot afford to be without in the very near future. BI crosses all industries and company size, but is it extremely important to companies in ‘data rich’ industries like financial services, retail or telecommunications.

Your competitors are implementing BI solutions right now which they will use to take your market share. BI can be a competitive advantage for a company if they can better understand their business or industry better than their competitors. If properly utilized, it can help identify opportunities, such as cost savings, efficiencies or process changes that will improve your position. Smaller companies can benefit even more since they tend to be more nimble than their larger counterparts. Late adopters of BI will be at a significant competitive disadvantage as BI is more widely used through various industries.

Your customers are expecting to experience the benefits of BI from the organizations they come in contact with. Loyal customers want to be treated based on their value and can get very upset when they are rewarded in one situation and treated poorly in another – by the same company. This requires recognizing them in real-time when they call or shop with you. The intelligence to do this is locked inside your data systems. Your job is to utilize it effectively.

Your management is requiring more information about operations and is expecting to see a return on all the data your organization has been gathering. A well implemented BI program will help keep management informed of potential problems or upcoming challenges, which provides a headstart on minimizing their impact or eliminating them altogether.

Lastly, your stakeholders require information on the organization’s performance soon after the month, quarter or annual close for the same reason management wants to know – to take action. Forget about month end closings, most retailers had the preliminary sales figures for the holiday shopping season within days of it ending.

Good data is the foundation of an effective BI program. It’s no longer about turning data into information, but transforming the organization through information and changing the way it operates. That’s the real opportunity. Get your ticket and get onboard right away.

CRM: How to Raise Your Implementation Success Rate

David Panitch — 2007-01-29T20:47:00Z

By David Panitch, Results Technology Group

Customer Relationship Management (CRM) is often mistakenly looked at as a technology fix for their sales organization. This view has caused many of the failed CRM technology implementations over the past few years. If you'd like to raise your implementation success rate, there are some key guidelines to follow. The first is to have a clear vision of how the technology will improve your customers' experience with your organization.

Your customer relationship vision should be grounded in what you believe your customers want and not how to make your business easier to manage. This often begins with surveys, focus groups and one-on-one interviews with key customers. Once you have compiled and analyzed this information, your customer relationship vision should become clear. Writing your vision should be focused on clarity for both internal and external stakeholders. Now is not the time to open up the thesaurus to see how interesting your words can be portrayed. Stay the course and be crisp and clear with your words.

Executive sponsorship is another key to improving your CRM success rate. Of all the success indicators, this one stands out as the one that can kill a project’s success faster than all of the others combined. You will need strong executive sponsorship throughout the project life cycle to ensure a solid implementation. Typically, to get the executive team on board you will need to present a strong ROI and other benefits to the entire organization. We will discuss in future articles how to present accurate measurements to support your CRM initiatives.

Whatever you do, don’t take for granted the importance of involving the user community in the early stages of the decision process. We recommend that you allow them to have input into the decisions at all stages of the project. This includes, but is not limited to: developing the vision, creating the benefit document for management, developing and presenting the project charter, researching technologies, developing the requirements document, participating in evaluation demonstrations and choosing the technology partner. This will accomplish two major objectives: 1) they will evangelize the project to their peers 2) the system will be designed by them for them to use. This will help increase your rate of user adoption and ultimately greater success in creating a more customer centric organization.

Now that you’ve made the best decision for your organization, don’t drop the ball now. Another key element in raising your success rate is training and education. We say training and education before of the importance of doing both. Training is the teaching of the user community how to perform the required tasks to comply with the developed processes. Often this effort is minimized and results in the user community “learning on their own”. This is not the most desirable outcome of an important investment in CRM processes and technology. Additionally, the education piece of the pie is sometimes left out completely. Education is the explanation of how and why the process is established and what the tasks within the processes are supposed to accomplish. If you’ve ever encountered the instructions in a new electronic device, you would have experienced training. But what if somewhere along the many steps explained in the instructions something didn’t work as expected? What would you do? If you had been educated on the how and why you’d probably have a good chance of figuring out how to make it work, but without it you’d be stuck starting from the beginning again. Not a good situation to be in especially when it comes to someone focused on your customers.

Measure. Measure. Measure. Without clear success measurements how would you know if you’ve achieved your goals? Put measurements in place to keep everyone on track, to know where you’re headed and logically to know when you’ve arrived. We suggest to our clients that they should develop a clear implementation plan, we call it their “roadmap to results” and to build metrics that keep them focused on where they are headed. These measurements should be utilized to manage your project plan. This will help both internal and external stakeholders in keeping their eyes on the ball. At the end of the day, your hard work is designed to produce results. Let’s know what the results should be before you get started. That will help everyone prioritize their time for the betterment of the organization.

If you follow all of these guidelines, you will have a much better chance of successfully implementing a customer focused CRM solution that is good for both your customer and your organization. Isn’t that what it’s all about?

Six Myths About Business Intelligence

Bryan Bennett — 2006-11-13T02:24:00Z

An effective business intelligence (BI) strategy is one of the most powerful tools available to companies today. It enables companies to better monitor and track the state of the business by providing the user with actionable information which can lead to better decisions. BI provides for data consistency since it is accessed through a common platform versus the disparate applications (ERP, CRM, HR, etc.) the data is derived from. Thus the information is timelier as it is typically accessed in real-time or near real-time.

BI is really not something new. It’s been around for years in various forms such as card decks, spreadsheets, etc. What’s new about BI is for the first time, technologies have converged where all the data companies have been collecting about their business can now be mined through a web interface for those ‘gold nuggets’ of information that may provide a competitive advantage.

We can discuss the benefits of BI all day, but we want to discuss several myths about BI that may be keeping your organization from pursuing it.

1.“It only involves technology!”

When I see the sales pitches from the various software vendors and system integrators, it looks to me like déjà vu all over again. I remember the same approach in the early days of customer relationship marketing (CRM). Many a company was told “…if you implement this software, you will have CRM”. As we all know, nothing could be further from the truth which was why so many early CRM implementations failed. BI, just like CRM involves changes in technology, processes and people. No amount of technology will fix human input errors without some corresponding checks and balances. No amount of technology will fix an organization’s multiple definitions of key elements such as gross profit. These inconsistencies lead many organizations to spending more time reconciling one report to another versus acting upon the information.

2. “I need a PhD to be able to use it!”

Some of the older tools that provided some intelligence did require someone with an advanced degree in statistical-astro-neural-physics to be able to use them. Today’s tools are a lot more user friendly. Vendors have recognized that “powers users” make up less than 10% of the employees of a typical organization. For BI to be widely accepted, it had to become more user friendly. Many of the BI tools currently available include functionality such as natural query language, which allows the user to query the data in the form of almost regular sentences versus a structured query statement. Some of the tools also include a drag and drop interface which allows a user to just drag the elements needed for the query to a workspace. Many of the tools also have a graphical user interface versus lines of code. It’s like the difference between using DOS versus Windows.

Users are no longer at the mercy of the one person at the company who knows where all the data secrets are buried. Most users with basic computer literacy level can use the tools with some training. Those without a basic computer literacy level may still have to rely on “Bob” to help them analyze the data.

3. “It’s for customer data only!”

BI is for information period. Whether the information is about customers, vendors, manufacturing, financial/compliance or customer service, BI will help your entire enterprise. It presents the single version of the truth about your entire operations, such as:

- the truth about how many widgets did XYZ Company purchase worldwide;

- the truth about the cost differences of parts purchased at the southeast plant versus the northwest plant;

- the truth about production costs nationwide or worldwide;

- the truth about what is the average wait time for customers between 4:00 and 5:00 at the call center in Peoria.

It’s all about truth and you know what the late, great comedian Flip Wilson said about the truth. (For those of you too young to know, he said “The truth shall set you free!”)

4. “It’s all about dashboards and pretty pictures!”

The dashboard visually displays important information on a single screen. It can quickly convey to the user actionable information to monitor the state of the business which is useful in consolidating relevant data from several sources and presenting it visually for immediate absorption. They are great in monitoring and communicating information that helps in the decision making process.

To be effective, you need more than a box of software from “Dashboards Are Us”. The dashboard has to present the right key performance indicators with the right thresholds supporting the red, yellow and green lights. The dials and lights need to be supported by the right data. This data has to be derived from the right processes. The user must also have the ability to drill down into the data to gain a greater understanding. You know that you have rarely created a report that didn’t generate several questions by the people the report was delivered to.

5. “It’s too costly!”

The software can be a bit costly, especially if you get the wrong size solution for your situation. It is important to choose the right tool for your size organization, data elements and business needs. If you have a vendor that tells you they have the right solution for you without evaluating your requirements, then you probably have the wrong vendor.

Your most important investment should be upfront in determining your needs, assessing your data and data quality, mapping your processes and determining the initial state of business intelligence required.

If you still think that’s costly, how much do you think it will cost you if you missed an opportunity, over purchased assets or mismatched future demand with production?

Also, don’t ignore the potential savings generated by a BI program such as the IT costs to maintain multiple technology footprints, time spent reconciling numbers from different platforms or that dedicated person you have just to pull your reports.

6. “I can wait until later!”

You can wait…only if your competitors will never embrace BI. I didn’t think so.

BI can be a competitive advantage for a company if they can better understand their business better than their competitors. If properly utilized, it can help identify opportunities, such as cost savings, efficiencies or process changes that will improve your position. If you are a mid-tiered company, like we primarily work with, you need to be smarter and faster than your larger counterparts. BI is a way to achieve that.

Late adopters of BI will be at a significant competitive disadvantage as BI is more widely used through various industries.

In conclusion, there is no reason to wait to implement a business intelligence program. That old saying about pay for it now or pay for the consequences later has never been truer. The tools on the market are mature since many have been adapted from other intelligence products. If you need help deciding what to do and how to do it, give us a call, we’d be glad to help.

Lastly, understand that BI is a journey, not a destination. As you implement your BI strategy, the more users will become more familiar with it and begin asking for more information. As they get more, they will ask for more. As they get more, you receive more information. Good luck.

The Importance of Adding a Data Strategy to Your Overall Business Strategy

Bryan Bennett — 2006-07-08T22:14:00Z

A business strategy is something that is considered sacred by most companies. Offsite meetings with top executives are held to prepare and discuss the strategy. The business strategy usually goes through several iterations before it is presented to the Board of Directors for review and approval. Sales are discussed. Marketing plans are floated. Production/Purchasing is scheduled. IT gets new hardware and software. Data is…

That’s right, data is probably not even mentioned. At best its considered part of IT. A data strategy is considered an oxymoron. But next to the people in your organization, data is your most important asset. Data touches every aspect of your business – sales, marketing, production, purchasing, etc. Everything is driven by data. How much did we sale? What is our expected response rate? How many pieces of part B do we need to buy? Ironically, without your data, you won’t know if your business strategy is successful or on track. Then why do most companies tend to treat data like a rented mule?

People tend to only become aware of data when there is a problem. But there are many hidden costs associated with poor data that could be costing you money or opportunities right now, such as revenue leakage, poor customer service and production losses and delays.

A data strategy is not just about the physical managing of the data. It’s really about making sure your data can deliver the right information, in the right hands, at the right time, to enable your organization to make the right decision.

We believe data strategy, sometimes called data stewardship, has 4 components:

Management: which is the physical aspect of handling data. This component includes the hardware and software technology, but also the processes, both people and machine involved in managing the data.
Quality: providing current, accurate and consistent information whenever and wherever the data is accessed.
Business Intelligence: utilizing the data to yield better, more complete and more useable information. This is what some have called, putting the information back into information technology.
Security: controlling access to the data to ensure that those who are supposed to access the data can and those that aren’t supposed to access it can’t.

Of course, the common response when this topic is discussed is, “But I already have a data warehouse. Why do I need a data strategy?” The data warehouse is only as good as the data that is in it. If you don’t have the right data or can produce the right business intelligence when needed, all you have done is put all your data in on place. It’s like putting a dress on a pig – it’s still a pig.

A sound data strategy will enable your organization to deliver data that is current, consistent and accurate whenever it is used or accessed. This leads to improved business intelligence and better customer service.

So what should you do today? Like any asset, you need to inventory it. You need to determine what data your organization has, what are the sources of this data, i.e., internal departments versus external suppliers or vendors, who handles the data in your organization and what is the final state of this data after any manipulation.

A data inventory should be accompanied by a data assessment, to determine where the weaknesses in your organization are that could impact achieving the full potential from your data. Additionally, this is a process that must be undertaken jointly by IT and the business people. IT knows about where the data is “buried” and the business people know their information needs. Additionally, this is not a project you can assign to the mail clerk or other entry-level person. The person in charge of this should be at a senior level with enough influence to get IT and the business people to work together.