Frost & Sullivan: 1to1 Impact Awards

Dr. Martha Rogers, the Founding Partner of Peppers & Rogers, presented the winners of these awards. She started by asking:

  • What if a European consumer package goods company could swab your mouth and tell you which toothpaste to use?
  • What if you could have a car custom built for you in two weeks? (Toyota can. You can’t get a sofa in 12 weeks, but a whole car can be built for you in two weeks, and more profitably.)
  • What if Apple and Nike teamed up to count your steps?
  • What if the fundamental assumptions we hold about business are wrong?

Among the cherished assumptions that may not serve us:

  • If people in Sales & Marketing will just do their jobs, we can always get more customers. That can be a deadly game. Need to understand that customers are even scarcer than other resources.
  • Our customers are not the thing that builds our business. Wrong. The only source of revenue is our customers. Customers are most valuable to us at the moment we are most valuable to them. We need to understand them and their needs.

Here’s her main point:

Taking the customer’s point of view may upend a traditional business model.

For example, most extended warranties are a rip-off. The guy who sells you the appliance is required to try to sell you this thing that has 100 percent mark-up. He can’t do it in good conscience, but is evaluated based on how many of these he sells. That makes him wonder, when the company says the customer is valued but pushes rip-off products, whether he can trust when the company says it cares about employees.

Likewise, Blockbuster had late fees as its big money maker, until Netflix came up with its no-late-fees model. When Blockbuster dropped the late fees, they did it two million customers too late. No one wanted to leave Neflix. Blockbuster would have had to seriously undercut the Netflix price to get customers back.

Martha’s new book (with Don Peppers) is Rules to Break & Laws to Follow. It answers the question: What do empowered customers, networked employees, innovation, culture and trust mean to the future of your business? I’m looking forward to reading it.

Award Winners were:

Customer Strategy: Travelocity, Watercolor Inn & Spa, Big River Telephone

Full-Suite CRM: Westpac Banking Corp, Voices.com, ESET Software

Marketing Optimization: AT&T, TD Bank Financial Services, Sylvan Learning

Sales Optimization: US Bank, DirecTV, The Berry Company

Customer Service Optimization: A.O. Smith Water Products, Virgin Atlantic, Earthlink

New Media: Procter & Gamble, Subway Buffalo SFAFT, La Redoute – For instance, Subway uses text messaging to send coupons to the 5,000 customers who have opted in. On a snowy day with light traffic, they can blast an SMS message to create some traffic. P&G has improved its organic search engine results.

Organizational Transformation: Honeywell Aerospace, Canada Post

Several of the award winners were then part of a panel with Dr. Rogers.

  • Brian Davis, VP Customer and Product Support, Honeywell Aerospace – Consolidated into client-focused teams, with units assigned to particular customers, to make it easier for customers to deal with them.
  • Ginny Mahl, VP, Sales and Customer Service, Travelocity – Customer Champion Program. Launched most comprehensive guarantee in 2005. Example: Alerting to amenities at hotel destination that may be out of commission, or airport problems. For example, if the pool is going to be closed, ruining a vacation with the kids, they alert the customer and give them alternatives.
  • Rich Martino, Senior VP, U.S. Bank – BLAST system
  • Bob Sloan, VP of Business Marketing, AT&T

These companies will be featured in the January/February issue of 1to1. A preview article was distributed at the meeting, and I look forward to reading it. You can probably read the stories on the 1to1 site fairly soon.

I’ll probably revise this post in a bit with some more links, but then again you can just Google the companies involved and see what they’re doing. I’m going out to dinner with Rick Short, who’s going to be part of the panel on blogging with me tomorrow.

Frost & Sullivan: Using Social Media to Drive Demand

Michael Masnick, President and CEO of Techdirt, is leading this session exploring:

  1. Blogs
  2. Social Networks
  3. User Generated Content (YouTube, Flickr, etc.)
  4. Twitter
  5. Wikis
  6. Virtual Worlds (Second Life)
  7. User Reviews
  8. Employee Communities

Our key take-aways will be:

  1. A framework for understanding blogs & social media in terms of how they can be used to drive demand
  2. Case studies on a few different ways to engage with new media audiences
  3. Examples and insight into what works and what doesn’t in the social media space

There was a significant discussion over whether or not to respond to negative comments. One participant said his company’s blog is to provide a forum for customers, and that they don’t respond on the blog. Someone else raised a question: If an issue surfaces through the blog and you address it, why wouldn’t you go back and do a blog post to let everyone know that you had resolved it?One of our participants mentioned that his employer, TD Bank has a Facebook group or application. I’m not sure whether I’m seeing the one he’s mentioned, because it may be limited to Canada. Its competitor RBC has a sponsored group, too.

There was a lot of discussion about ROI and metrics. From my perspective, the key is making the “I” part of the ROI equation as small as possible. Train employees to engage as volunteers. Get customers involved. Provide the platform for them to have discussions. With little expense, it makes the return (much of which may be hard to quantify) easier to demonstrate.

When we broke into roundtables to work on case studies, I was with three consultants so my employer, Mayo Clinic, was the only organization left. So I had the benefit of Kevin Hoffberg, Ginger Conlon and Anne Smith Rainey (from Publicis Modem) giving their advice based on what we’re doing. Kevin is blogging their recommendations for Mayo Clinic, as well as those from the other groups for U.S. Bank, Pfizer and Armstrong.

Frost & Sullivan Breakout: Online Marketing

In an era in which overall marketing spend is projected to be flat, this Peer Counseling breakout session moderated by Kevin Hoffberg gave us a chance to share ideas on how online marketing will claim an increasing share of that slowly growing pie.

Here are my notes from the session. I’d welcome others who participated in the conversation to jump in with additional clarifications or comments.

Rick Short mentioned CIC Data as a way to monitor and measure word-of-mouth in China.

Intuit uses Bazaar Voice to see what customers are out there saying about their products, and incorporating that user-generated content into the Intuit site.

Cara Shockley from HP.com says linking to support groups (supporting the support groups) has been an important strategy. User communities can be a huge marketing advantage. Jim from Eloqua calls it a source of strength. You’re not just buying a product, you’re joining a community. This is Wikinomics…letting people who are your users add value.

Financial services company have had a fear of transparency because they are worried about getting flamed. There’s a big difference between an official corporate blog and understanding what people are already saying about you. The conversation is happening, so you need to at least monitor. The representative from Union Bank says they are informally getting into commenting on some other blogs, but not ready to jump in yet. Advanta, another financial services company, has started a social site called ideablob.

For a software company, half the revenue is from support. So having communities could cut revenue. They don’t want to aid these non-paying communities. Why not create an on-line knowledge base by subscription? If you don’t support customers with an online community, those communities will spring up, and your support team will lose. This is a lack of vision that could lead to a Wikipedia-esque alternative replacing the software company’s World Book.

Check out Quicken online , and their Facebook page.

One of the keys in blogging and liability for companies is that if you don’t moderate comments, you don’t bear the responsibility for what’s posted.

Jumpup.com is a QuickBooks product, and now they went with a free version of their entry level QuickBooks product. They developed a Just Start contest for would-be entrepreneurs encouraging people to quit their jobs and start small businesses. This could have tie-ins for financial services companies, so making some of those connections could build.

Peter from Intuit mentioned Genesis measurement services as a possible integrated service.

Please do add your comments, and continue the great conversation we had this morning. Feel free to add links to helpful resources in your comments, and particularly any case studies of things your organization is doing.

Frost & Sullivan Keynote: Siisi Adu-Gyamfi

Siisi’s keynote on finding a balance between growth and profitability was interesting. He’s with Textron. One of his opening points was about the futility of businesses continually squeezing suppliers for lower costs. For example, if GM squeezes its suppliers too much, they can’t be profitable and will no longer be a supplier. Instead, you need to think creatively about value creation.

In this model of seeking new business, you create a Reference Value based on the price your competitors are currently charging for their product or service. Then you think creatively of alternatives that can meet the customer need differently. Add the economic value of positive differentiators, where you are creating extra value. Subtract the value of negative differentiators, where your offering doesn’t quite provide what the competitor does. If you do it right, you’ll create a Total Economic Value (TEV) for your potential customer that’s higher than the Reference Value, and can charge a price that splits the difference.

Siisi used the example of Snap-to-Connect hydraulic connectors, which are an alternative to threaded connectors. Instead of taking 60 seconds to connect, they take 3 seconds. Multiplying that 57-second difference by $50/hour times 160,000 connections, the savings per connection is $.87, for a product that costs $.50. Not hard to see why sales have gone to $100 million over the last eight years.

Kevin Hoffberg, who is moderating the blogging panel on which I’ll be serving tomorrow, has detailed notes here. He’s also leading our next session, a Peer Counsel roundtable.

Change in Plans

“Wait a sec… I think I just… Yeah, I just had an idea.”

– Lloyd Christmas, Dumb & Dumber

A funny thing happened on the way to Phoenix. As I was sitting in the airport in Rochester, Minn. I had finished a post previewing a series on using Facebook for qualitative market research, and promised that my next few posts would flesh out this concept step-by-step. But some First Class brainstorming on the flight from Minneapolis to Phoenix has caused me to think more expansively. I have some more details to work out, but as I do I will return to that concept of Facebook Focus groups as part of the the broader framework.

So here’s a review of my Sunday travel experience, and a look ahead to the Frost & Sullivan conference, from which I plan to be blogging.

  • Goofy TSA moment: It might not be exactly a TSA responsibility as much as a general transportation regulation issue. As I disembarked from the tiny plane that had made the puddle jump from Rochester to Minneapolis, most of the passengers were gathered around the door where the luggage that had been checked planeside (mine included) was about to be delivered. The area was packed, and I didn’t want to block the doorway, so I set my laptop bag in one of the chairs just inside the waiting area near the gate. The gate attendant noted that I had broken the plane of the doorway (as Marion Barber, III just did to give the Cowboys a 14-7 lead over the Giants), so as I popped back in she said, “Sir, since you left the gate I’m going to need to have you show me your boarding pass.” Me: “You’ve got to be kidding.” Answer: “I’m NOT kidding. Regulations say that when passengers leave the gate area, they need to show their boarding pass.” This wasn’t a big deal. I pulled it right out of my coat pocket and it was quickly resolved. But to the extent that devotion to regulation enforcement has trumped common sense (she knew I had been on the plane, and watched me walk up the ramp and set my laptop bag 18 inches outside the gate and step back in), it’s a sign that Mark Steyn is right. If we’re entrusting our security to aggressive enforcement of the gate regulations instead of, say, the porous borders through which the next 9/11-type terrorists could enter, that’s a losing proposition.
  • Upgraded Seating. What led to my first-class brainstorming was being in, well… First Class. I had just gotten notification that I had achieved Silver Elite status with Northwest Airlines based on my travel for 2007. Our Carlson Travel group assistant had noticed that I had been booked in a middle seat, and sent my assistant a note saying that with Silver Elite I could book premium seats at no charge through NWA.com anytime before the flight, and had changed me to aisle seats. I’m still not sure exactly how I ended up in First Class. If anyone can fill me in on how this Silver Elite thing works and what I need to do to have the best chance of getting upgrades, I’d welcome the explanation, because I’m really new at it, and it was nice to not be crowded, and to get an omelette instead of Pringle’s.
  • Spiritual Social Media. Because my first flight was at 7:15 and I didn’t arrive in Phoenix until 11:20, I didn’t get to go to church. I watched a John Piper sermon on my video iPod. I’ve written previously about how I appreciated what Dr. Piper and the Desiring God Ministries team have done with podcasts through their radio without radio initiative. Now R.C. Sproul, another of my favorites, also offers his daily radio program as a podcast.

After Dr. Piper’s sermon (and finishing another good book I’ll be reviewing soon), I was in a great frame of mind for heavy-duty brainstorming. I look forward to sharing those ideas as I refine them further. Meanwhile, the Frost & Sullivan conference is about to begin, in an hour or so, so it’s time to hit the showers after having gone for a run here at the Wigwam Golf Resort & Spa. It’s a really nice place, and the weather is fantastic.

My next few posts will be about what I’m learning here. I attended another of these Frost & Sullivan events last July and blogged about it. I expect this one will give me lots of material, too.