Not all customers are alike - and some aren't even customers at all ...

Boy, I can't wait to share a blistering blog scandal with you. First, some background.

I was chatting with Jim Sterne, an eminent colleague from Canada who is also a customer strategist, while we were in Bogota at a recent CRM conference we were keynoting. I mentioned that I had been developing the five forces of customer experience management (think Porter's Five Forces, but through the looking glass ... ) that has as a pillar that a company's value is defined in part by networks of opinion. This is clear from detailed stock price research in financial services when a firm engages in fraud. The loss in total return to shareholders often far exceeds the actual fraud. 

You can also look at what happened when Egg, the online UK bank, was recently acquired by Citigroup. Citigroup promptly "fired" Egg's least profitable customers, sending them a letter indicating that Citigroup viewed them as a "risk". Big hullaballoo in the press, followed by threats by the UK government to look into it -- followed by the UK government actually looking into it. In the world of enterprise risk management, that means you've got reputation risks compounded by regulatory risks. Bad move, Citigroup. Forget the money you probably "saved" by firing those customers.

The point is, and Jim Sterne bore me out on this based on social network research he's done, your customers aren't all worth the same to you. Some Egg customers might not have been profitable, but because many of those actually paid their bills on time, they were rightly annoyed to be called "risky". Once you get to negative word of mouth, your "net promoter score" (Google(tm) that) drops like a cannon ball in jello. Splat. 

And, other folks who are not even your customers can pile onto this. This is negative network effect in action. 

Take the example of this thread on the very solid food blog Alosha's Kitchen. She wanted to share a potato salad recipe she had borrowed from a friend's site -- with some modifications of her own. She knew that the recipe she was borrowing had appeared in some form in Cook's Country (a publication of America's Test Kitchen, and Cook's Illustrated, the latter which I enjoy very much).

So she made her mods, gave Cook's Country due credit -- and promptly got called on the carpet by a public relations rep at ATK. You can read the entire exchange at the link.

The interesting thing is that this one incident has now generated literally HUNDREDS of responses just on Alosha's Kitchen blog. I suspect it will be echoed tens time over by the time it's all done, generating a signal in the blogosphere a thousand times bigger than ATK intended.

And, the question arises: What's the cost to ATK? First, you have to look at the brand values that are expressed in the company's behavior. Actions speak louder than words. Prior to this exchange, for many bloggers, ATK may have represented a quality assurance team, a bunch of heroic, practical cooks dedicated to helping us all avoid a bad meal, and to even ensure a very good meal when it really counts. Now that this exchange has been publicized, for many people the ATK brand values might be defined differently. Words used include "arrogant". 

Secondly, you have to look at lost future sales to current customers (discounted to today using the time value of money). Are we talking hundreds of dollars, or thousands? 

Thirdly, you have to look at the effect of the net promoter score, which is based in part on Reichheld's empirical (and generally accepted) observation that people who don't like your company will talk you down to other people. (New studies show that the negative word of mouth effect varies by sector and competitive environment, but the effect is still there). So, what is the loss of sales to customers you MIGHT have had? Some might argue you cannot know, but in fact, you can do a nice estimate based on Reichheld's work and multiplying by the discounted future value of the estimated number of lost future customers.

I'm guessing the cost of this exchange will be in the tens of thousands of dollars of lost future revenue. 

Now, when I teach the five forces of customer experience management, one of the points I make is that these forces make it REQUIRED that companies develop new core competencies, and chief among them:

Monitoring and dealing with bloggers in respectful ways. In fact, if you can, leverage them.

So, what would you recommend to ATK at this point? 


It's not all about the iPhone -- or is it?

Saw this on the NYTimes blog section today. 

V.C. Advice to Entrepreneurs: It’s Not All About the iPhone
Though almost every discussion at the MobileBeat conference in Sunnyvale, Calif., on Thursday centered around the iPhone, venture capitalists told mobile entrepreneurs to broaden their focus and build applications for all phones. Still, all anyone wanted to talk about was the Apple App Store, from which users have downloaded 30 million applications for the iPhone this month.

Startups should “intelligently hedge their bets across multiple platforms,” advised Richard Wong of Accel Partners. His firm has invested in mobile games and application site GetJar, “the store for the other 3 billion phones that aren’t iPhones,” as Mr. Wong put it.

Rick Segal of Blackberry Partners Fund and JLA Ventures reminded developers that the iPhone only accounts for a tiny share of the worldwide market. In India, for example, Nokia has 70 percent market share. “You must think multi-platform,” he said.

Some investors insisted that multiple mobile platforms–whether Apple’s, Google’s, Research in Motion’s or others–will thrive. Matt Murphy, head of Kleiner Perkins Caufield & Byers’ $100 million iFund, said most entrepreneurs who pitch him have iPhone applications, but that the platform war “is not a winner-take-all game.”

David Sokolic of Battery Ventures disagrees. He predicts a shakeout akin to the PC market and Microsoft’s Windows, with a clear leader emerging...

Two learning points here, I think.

1. It IS all about the iPhone for mobile entrepreneurs, whose main goal is to take invested capital and gain quick cash flows. The iPhone is not the product: the real product is the Apple platform, which is about as direct-to-consumer as you can get, with the added bonus of being a trusted channel. Apple's true insight with the iPod and the iPhone is that the PLATFORM is the offer, and the benefit of that offer is a simple, trusted source for digital content. By giving that platform so easily to entrepreneurs, Apple theoretically can build robust product ecosystem very quickly, while giving software developers the ability to leverage what they presumably do well: build and sell software. Software entrepreneurs are usually terrible at marketing. 

Contrast the Apple "platform" with what you have to go through to get Nokia's attention in India. I think the VC's are looking at this wrong. The risk is in getting to early cash flow, not in diversifying the customer base at a huge up-front cost for HR, multi-platform technical support, and high cost of marketing. 

2. Will a clear leader emerge? One thing that strategists almost uniformly ignore is the power of the retail channel to keep a leader from emerging. So long as both hardware and software are sold through retail, you'll have multiple players. Retailers just have too much incentive to keep suppliers vying for the value of their in-person sales channel to give it over to one provider. It gives the retailer buying power, and it gives the OEM a channel they can rely on -- even if there's price pressure. 

So, to answer the question, will a clear leader emerge, we have to look at the question, will people start buying phones and mobile software primarily through retail, or will they start buying the phones and software primarily via the Internet? Because on the Internet, clear leaders do emerge.

Want to lay bets on the future of mobile phone retail? I know how I'm placing my own bet.

UPDATE: Very interesting and intelligent forum/blog discussion on the topic of the iPhone app ecosystem vs the Facebook ecosystem. I have my own views, but the interesting thing here is that you can see the POV of investors, developers and customers. 


Framing, Obama, Jesse

And while we're on framing:

The Obama/Jesse controversy is a perfect example of "framing" with regards to racism in America.,0,3451704.story

The civil rights frame is "racial justice". Obama's is something to do with "beyond race." Some middle-of-the-road and right-wing listeners don't want "racial justice" to incur a penalty on them for things they didn't do ("I'm not a racist, why should my government have to use my tax money to create racial justice?") They want everyone to have a chance to make it in America, black or white, and to take responsibility for their own success or failure. That's the "personal responsibility" frame.

So, the argument that Jesse Jackson is making is essentially this: By Obama's adoption of the "personal responsibility" frame, he is rejecting the social/racial justice frame that created (and creates for many today) meaning with regards to civil rights and justice.

The communications lesson is that choosing a frame right can help you appeal to specific, desired audiences -- and at the same time keep you from appealing to other audiences, depending on the amount of bias for or against certain frames. I expect Obama knows what he's doing here. The risk for him is not capturing the middle. He knows he's got the left. So the personal responsibility frame can work for him from the middle to the right. As analysts have said, Jesse's comments probably make white middle-class people comfortable.


Framing, frames and globalization

We think and remember in stories, metaphors and other "non-literal" structures. 

This is why it's so hard to get people to tell us how they really feel and think using surveys. We can get close, we can use tricks -- and we can backfill with qualitative work -- but in the end, we'll get closer to understanding customers and how they perceive us by revealing the stories and metaphors they use to perceive our offerings.

Those frames vary across cultures. 

Challenge to my readers: Why are the Apple Mac vs PC ads funny and memorable in the US? Why are they more controversial, and perhaps less effective, in Japan? To what extent is the comparison ad less powerful in Japan because of they way Japan frames its key stories?


Benefits of strong global leadership talent

I got my executive MBA from TRIUM, which bills itself as the first truly authentic global MBA for executives. The small program (a cohort has ranged in size from 35 to more than 60) has been around since 2003 and over those years has slowly increased its reputation on the street until it burst to #4 (Financial Times) the first year it was ranked, only to better that ranking in its second year, becoming #2 globally.

That's nice and all. But the point for me was to actually become better prepared for what I saw as a critical next step in my career: to better fill the gap between traditional strategy and global business strategy. Since getting my TRIUM degree I've been working with the program as its alumni chair to provide services to alumni while providing feedback to TRIUM based on what students and alumni say to me and the committee I run.

One of those big topics: The curriculum. There's no doubt that the three schools which established TRIUM have among the best academic reputations in the world. And there's no doubt that Matt Mulford, who has long been leading the struggle for an integrated curriculum in cutting-edge areas, is a superior international player in global curricular development. 

But let's remind ourselves: What's the goal of a program such as TRIUM's, or Wharton's, or Duke's Fuqua School? I think it's about creating an awareness among students (along with key skills) that a global leader differs from a domestic leader. The issues are different in economics, politics, human resources, strategy and core values. 

I've been thinking about this a lot lately as I wind down my two-year stint with TRIUM's alumni group, and lo, behold, an article appeared in the Insights newsletter from the Association for International Business (AIB - I'm a member primarily because of its top-notch journal).

Joyce Osland (Lucas Professor of Global Leadership, San Jose State University, USA), has written a breezy overview of global leadership frameworks and issues. She reports that over 60 competencies have been identified in various studies of what makes a global leader truly great. She also describes another research path that focuses on tasks and effectiveness. Presumably, defining what you should do effectively to succeed gives you a clearer, more measurable baseline than softer competencies -- but nevertheless you can better infer the desired competencies if you know what you, as a leader, need to produce at the end of the day. 

A surprising theme that emerges from Dr. Osland's article, however, is that soft skills indeed dominate the profile of an effective global leader. "In addition to the high-level problem solving and strategic thinking that one would expect in such a population, their cues and strategies evidence well-developed schemas for boundary spanning and stakeholder management, reading cultural and emotional cues, and seeking clarity." 

The six core competency categories Dr. Osland's own research has identified include cross-cultural relationship skills. Another study identified personal transformation, self-awareness, inquisitiveness, empathy, self-regulation, social networking -- in short, an entire set of skills and processes requiring maturity and emotional intelligence.

This doesn't surprise me. A lot of my work in strategy and implementation is immersed in people issues: What's the value proposition for these cultures? What's the values frame in which customers will assess a brand? What kinds of employees are right for implementing a CRM system? Is leadership behind the new customer strategy? It might seem that my work is about customer relationship management in technical and marketing terms, but at the end of the day, global CRM leadership demands global leadership -- fundamentally different skills than traditional technical and marketing skills. And it's not just yours truly that has to execute well using these skills -- it's my clients, too. 

So, I'm trying to figure out how to squeeze out some that TRIUM knowledge into my clients' C-suite. 

Not because it's about TRIUM, but because there's so much at stake with getting global leadership right. I think TRIUM exists precisely because companies are desperate to see what's around the corner. Wal-Mart got booted out of Germany at a cost of a billion dollars. Even for the number one retailer in the world, that's more than a few bits of silver.

Multinational corporations with the ability to develop global leadership internally do better (Stroh & Caliguiri, 1998). Individuals with global leadership skills create global competitive advantage for their companies. "Businesses have reported an inadequate number of global leaders," reports Dr. Osland.

My part in all this is to get my clients focused on what is really happening in various global markets. It makes my work easier if they know why I ask the questions I do, why I insist on the data I do, and why I recommend the responses I do. It's easy to want to do in Europe what you've done in the US, or to do in China what you've done in Europe. But it just doesn't translate. Do you think Wal-Mart was thinking of selling in China when it came up with its everyday low price brand promise? If they were, then they simply chose the wrong positioning for their company, a major blunder. Were they aware of Germany's culture, laws and commodity retail ecosystem when they developed their everyday low price brand promise? Did they realize that Germans actually seek variety more than they seek lowest cost? 

I'm not singling out Wal-Mart. I just use them as an example of how every decision, including fundamental position, has global strategic consequences. 


Feeding vegetarians to cattle -- social responsibility?

I'm so way behind on updating my blogs it's crazy, but work has been at a white-hot temperature lately, starting with prep and follow-up for the Bogota CRM/CEM summit, and client work, and my talk on loyalty to the American Strategic Management Institute. 

So, I'm doing a little work for a client on the issue of corporate social responsibility, and in my work I run across this link that has a deliciously funny error in text describing a new hot dog product.

Vienna Beef has entered the natural food arena with its All Natural Franks. Made from premium, vegetarian-fed cattle, the naturally cured hot dogs are formulated according to the Chicago manufacturer's century-old recipe, and contain no artificial flavors and colors, as well as no antibiotics or synthetic hormones. According to company president Howard Eirinberg ...
and so on.

So, in case you missed it, it appears that Vienna Beef's All Natural Franks are made from cattle whose main feed is vegetarians. It seems a sweet revenge.


Bogota, home of our upcoming CRM/CEM Summit

Rafael Rodriguez, director of Focused Management in Colombia, is a sharp management consultant and a leader in the country on organizational development and CRM. He also lectures and does executive training, which is how I met him several years ago, when he and I were doing that in Shanghai together. I had the great privilege of sitting in on a half-day session he did on CRM and the balanced scorecard.

In fact, it was Rafael's talk that got me thinking about the long list of management frameworks that have been paraded out by gurus, consultants and academics. Which really work? (Check out the book "What Really Works," one of the best responses to the question, and a solid methodology that I prefer over many other more famous ones.) My own pursuit of the answer has focused on redefining the question like this:

What Really Works = What Activities Generate Results that Consistently Attract and Retain Profitable Relationships with People and Businesses?

Notice that the results of these activities are not necessarily products or services. The only operant attribute of the whole business of doing good business lies in the nature of processes. I can hear many finance folks out there saying that shareholder value can be achieved through things like currency swaps and futures trading and so on. While the wealth is real, and I don't begrudge my rich friends in financial markets their moolah, gotta say, not interested. I'm interested more in the human side. What can we do to attract and retain customers?

Zaltman's ZMET method provides a clue. In "How Customers Think", he nails it when he says that CRM strategies need to figure out how to get people to remember your company, and to tell stories about it -- and hopefully great stories. So, these strategies should focus on what creates positive memories.

If that sounds like soft, social science stuff, be warned: The best experience management strategies involve some of the most advanced mathematics available. And they require some of the most advanced approaches to HR training, innovative qualitative intake, and ultra-disciplined operational measurement and improvement.

In any event, Rafael Rodriguez, my friend and colleague in Bogota, was a key inspiration for getting me to reassess the merits of many common management frameworks.

Rafael, along with conference organizer Practica, has put together a great roster of speakers and trainers for their upcoming summit on CRM and customer experience management, and I was thrilled to be asked to be part of it. (Here's a link to the online promotional page for the conference.)

The great news is that several of my TRIUM global executive MBA colleagues are in Bogota. One of them, Alfredo, is on the TRIUM Alumni Steering Committee (TASC) with me, and as the date approached for my visit, he and another TRIUM colleague, Leopoldo ("Polo") have worked to set up a cocktail party at the famed, swanky Gun Club for TRIUM alumni, as well as for alumni of TRIUM's sister schools, the London School of Economics, the Hautes Etudes Commerciales, and NYU-Stern. These three schools put together TRIUM, and have found the accredited degree program to be a big hit (we were ranked the #2 global executive MBA program last year by the Financial Times, boast, boast). My hat is off especially to Polo, who has worked especially diligently with the alumni contacts for the three sister schools. I am looking forward to a great cocktail party, and to meeting some of the top business leaders on Colombia.

Rafael, gentleman that he is, also has agreed to be one of the sponsors, a fantastic gesture.

So, today, I'm cleaning and packing, rehearsing my custom presentation I did just for Rafael (on my model of the Five Forces of Customer Experience Management), and -- best of all -- waiting in anticipation of Angela's special dinner for me. Tonight, it's coq au vin. She has a great technique for this dish, and it's one of my favorites. (If you want to see her cooking in action, you MUST check out her food blog here.)

I think my next blog posting will be pursuant to a request I heard from my Dubai CEM delegates, on cross-cultural issues in CRM. I've got a lot of stuff to say on that. And it sounds like the problem of "global CRM" that shapes this blog is truly a management challenge, everywhere I go. That's good for me! :) Luckily, there are indeed some best practices, a lot of research, and plenty of failures for managers to study carefully. Or else!


Dubai is done, time to fly home

I had a terrific time with the delegates at the most recent GCCRM customer experience management training, which I did with fellow partners from Shanghai and Dubai (via Ireland). The folks in the room were bright, senior execs charged with either CRM or CEM responsibilities at their companies, confirming the trend I noted in London earlier this year that "experience management" is increasingly part of the title of senior managers. In fact, I'm seeing it more often in titles that I've seen CRM in titles.

This may be a sign that companies appreciate the strategic importance of CEM, while simultaneously demonstrating that their faith in CRM as a strategic initiative may be flagging. That's a shame, because CRM is indeed strategically helpful (except in rare instances where it's only a platform for sales efficiency).

I was particularly struck by the diversity of the companies. We had banking, oil, grocery retail, hospitality ... and by and large the evaluations were really positive, for which I am grateful.

I'll post a picture up here when I get a copy from Alice Tse, the coordinator, who as usual did a tremendous job with the event.

Now, I'm off to dinner, and then I hop on a plane back to DC sometime very close to dawn. I haven't slept well the last couple of nights because of jet lag. Now that I'm heading back, I can feel the double-whammy jet lag already!


First, Dubai, next Colombia

I'm in Dubai, getting ready to teach another round of the CEM Certification course that I've put together with my GCCRM global partners (see the link on the right). We've got folks from automotive, pharma, banking, hospitality -- it's going to be great, and a terrific opportunity to do cross-cultural strategizing with the people here in attendance.

We're staying at the Crowne Plaza Dubai, which is a popular stop for the local government folks every Thursday, and which sports Irish, Italian and Polynesian food. There's even a McDonalds on the first floor. (You can bet I'm photographing their merchandising on a break. I took a bunch of pics of Burger King when I was in Montreal -- that's worth a couple of blog postings by itself!) My colleague Sampson does a touchpoint/brand value assessment of McDonalds and Burger King in the course. It's fascinating.

Check out the May 20-21 lineup for a customer experience global summit here. We've got a terrific front-line team! And I've put together a private blog for all attendees. We hope to have over 100 in attendance, which should make for an invigorating session, and a blog with some staying power. (You need a high number of blog readers to ensure sustainability. The number varies with the blog's focus and the level of topical concern of the audience, so you can't generalize. If we get between 20 and 40 registered bloggers, we'll be good.)


Google + Salesforce = Microsoft + Yahoo?

The buzz about's integration of Google apps into its platform has gotten people thinking about the value of a potential merger. 

Google thinks big. Salesforce thinks big. Both companies have cultures imbued with the concept of "network returns" and "wisdom of crowds". (Google leverages it in different ways, largely through analytics. Salesforce leverages it in their application programming interface and code exchange architecture.)

My first thought was that Google's brand offer is broader than's and so the Google brand wouldn't be made "bigger" by such a merger. Microsoft needs a company like Yahoo. Yahoo definitely needs a company like Microsoft. The complementarity in culture and market is really strong for them, and makes both brands bigger.

The key rationale I could see for the Google/sf merger: Google might feel it could use some of's software/platform. If Google feels it can win 18 months of development time by not reproducing what already does, then the merger might in fact help Google in the broader business application market. Certainly I think Google would be better off throwing programming resources to improve/use an existing platform such as's, than building another one themselves. 

So, this may not be an issue of brand-building. If Google and get together, it would be more about winning time-to-market as Google goes after the broader business market. They might want a piece of software-as-a-service CRM ('s sweet spot), but that may just be secondary.

Which begs the question: If they merge -- as opposed to being merely tightly integrated partners -- can the brand flourish? What do they get from such a merger? I gotta say, they're doing OK on the web app platform side. Growth is good. Brand is strong.

About the ONLY rationales I could come up with: mobile computing, and global market strengthening. 

Which leads us, inevitably, to China and India. And to Shirley Young, who's on the board. Her experience in Asia-Pacific is outstanding. Her Fortune 500 experience is strong. She's also on the board of TeleTech Holdings, a customer management company with strong business process outsourcing revenues. The question I'd want to explore: Is she, like so many others recently, in the conversation about China becoming a stronger target country for sales, as opposed to merely an outsourcing market? Shirley's profile in China-USA cultural relations is strong. She worked on GM's strategy in China (a hybrid of labor arbitrage and target market strategies). 

I can't help but think that wants half a billion new seat licenses. 


In Montreal

I'm inside yet another hotel conference area in a fantastic city. But of course so far all I've seen is the hotel, which looks just like every other hotel in North America. So, Montreal will have to wait until I get through my part (although I may skip out to dinner in old Montreal with my client contact tonight).

My client, a service agency of the Canadian government is doing a three day session on CRM and I'm contributing to the CRM strategy training on Day 2. Today is Day 1 and I'm listening in (both in French and in English) on the plans, vision and challenges facing the agency. A stellar group of people, good leadership skills, some systems in place (especially in acquisitions), but still a need to define and execute on key performance indicators, especially client satisfaction.

More of an update later ...

UPDATE: The training day went great, especially in the morning session. The afternoon session's time probably could have been better spent just interacting with each other about applying the morning content, and then a group nap. This has been an intense few days for these folks (and for me). 


And the prize goes to ...

I'm heading off to Montreal to deliver a customer strategy training with the Canadian government tomorrow, but I wanted to give a shout out tonight, very briefly, to Sampson Lee, a dear friend and colleague who heads up GCCRM ( Sampson (pictured on the far left, above) has again put together a tremendous program in Shanghai on customer management. I was privileged to be a trainer to a solid group of marketing professionals at the InterContinental Pudong (which provided me excellent support as well for a cocktail party I put together for TRIUM, HEC-Paris, NYU-Stern and the London School of Economics alumni).

Sampson has the largest portal in China dedicated to customer management issues, and consults to top Chinese companies. His partners are consultants from around the world, and his activities increasingly are global in scope, with trainings being held around the world, and comprehensive customer experience studies being executed across many cultures and continents.

But with all this activity, Sampson, along with his business partner Alice Tse, still manages to put together an annual awards ceremony to global companies best representing leading customer management strategies and cultures. And, he makes a donation to Operation Hope, a child-focused charity.

Here are some pics, the one above is from 2004, when I participated in a huge awards ceremony in Shanghai, giving an award to China Merchant Bank. The first one in the posting is from just a few days ago, again in Shanghai, where Dialog Telekom, the leading telecom in Sri Lanka walked away with many awards for their incredible customer-focused solutions, service and support. (Hello to Ayomal and Sandra!)

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