Tuesday, March 31, 2009

10 Principles for Needs-based Segmentation : # 5, Grading or Valuation

Step 5: Grade customers within each segment


Marketers often use the terms “grading” and “ segmentation” interchangeably. And that’s unfortunate, since the distinction is important. The two are entirely different processes; together, they create a very powerful economic model for customer selection, in order to achieve an optimal mix.


Grading is strictly an economic concept. It is done only within a segment, defining various levels of economic value within that segment. It temporarily sets aside the issue of customer needs or other characteristics, and can usually be accomplished using only data you already have in-house.


Grading is a means of estimating the revenue currently and potentially available from that segment, allowing you to identify which groups are not only most responsive to what you have to offer, but can also help you to increase profits – and are therefore really key to the success of your business. This, in turn, allows you to make intelligent decisions about investment choices and resource allocation to acquire and nurture more of this kind of business by targeting those segments to which you can deliver superior value in profitable manner. In other words, effective grading serves as a primary building block for any firm that intends to optimize its market coverage model and to manage its customer base as a portfolio of assets that need to be managed proactively.


Here’s how it works:

Within each segment, divide all customers into five to 7 “grades,” based on the revenue you received form them over a given period of time. The top 5% are rated XL; the next 15%, L; the next 25%, M; the following 25%, S; and the bottom 30%, XS. [Historically,  companies used 3 or 5 stages for their grades. We contend that less than 5 provides insufficient granularity into the insight – again, as Derrida maintains: ”the answer is always already there.”]


You can fine-tune your grading system further by determining not just raw historic sales volume, but potential or projected Lifetime Value (LTV) of these customers to you – understanding that realization of that LTV has more to do with how you treat your customers after you’ve acquired them that with the method of acquisition. Given what it costs you to acquire, supply, and service this customer … the anticipated length of time you’ll retain its loyalty … and the revenue that this will generate … how much profit will it bring to you over the expected duration of the relationship, (expressed in terms of Net Present Value)?


It’s not unusual to find substantial surprises in an LTV analysis. A demanding customer who buts primarily on price, for instance, on condition that you shave your margins paper-thin, may be less than profitable to serve – no matter how high its purchase volume. On the other hand, a smaller, relatively low-purchase-volume customer, who ranks high relative to the other criteria above, may be significantly more profitable per dollar you invest. Understanding his priorities may will pint you toward other companies with similar needs, but much larger budgets. In short, it’s critical to use your marketing imagination to manage the LTV of your customer.


Even in isolation, grading can be a significant productivity tool. Not only dies it allow us to direct our investments more effectively – it also serves as a foundation of better field sales force effectiveness plan and a targeted communications strategy, rather than treating everyone as the same or “throwing spaghetti at the wall”.

10 Principles for Needs-based Segmentation , 1-4

 Here are some guiding principles, 10 of them, tested and tried, for this test of "selection".

Step 1: Identifying your best customers


Earlier attempts at segmentation generally focused on certain demographic characteristics, such as company size, SIC code, sales volume, and the like. This was (and is) certainly a start; but compared to today’s segmentation strategies, it was like wielding a meat cleaver rather than a scalpel. Demographic, firmographic and psychographic profiling, after all, tell you relatively little about a company’s specific needs, its interests, or its ways of doing business. Two customers, who look virtually identical, according to these criteria, may in fact buy from you for very different reasons. One may be among your most loyal and profitable customers – while the other is hardly worth the effort.


Today’s most successful customer relationship and database marketers begin at the other end of the equation – examining the needs that your most loyal customers meet when dealing with you. The starting point for this kind of analysis should be defining those customers – focusing on those who consistently give you their largest share-of-wallet, use the broadest range of your offerings, and provide the best profit margins.


Step 2: Identifying their needs and concerns


Your next challenge is finding out why these companies have chosen yours. Which of their needs have you been particularly qualified and willing to meet?


Before you go outside to acquire this information, ask those people in your own organization who know them best, such as account managers, sales reps, and dealers. Asking where you might improve your service to them can help you identify unmet needs, as well. You have a wealth of information right at hand; and it’s data that is unique to your company. Your competitors’ segmentation won’t look anything like yours.


In the process, find out as much as you can about how their business, and particularly their purchasing cycle, works. Are the company’s purchasing decisions centralized or decentralized? How long is the buying cycle, form initial identification of needs to purchase decision? Who (by job title) influences that decision, with what degree of clout, at what points in the cycle? What information do they need to do that, and when?


Next, check out what’s available in industry research – for instance, from trade journals, government sources or professional organizations in your customers’ fields. For additional “data overlay” information, or to validate the data you have, such firms as Dun & Bradstreet are a resource. In some industries, there are very good syndicated reports available.


Your best sources of data, however, are your customers themselves. You can initiate ongoing two-way dialogue directly with current customers, via such techniques as offering an inbound 800 number or a help line, establishing users groups, publishing a market – or segment-specific customer newsletter and interviewing customers for articles, scheduling advertising or direct mail with a response mechanism, querying visitors to your trade show booth, and conducting surveys or focus groups. The burgeoning growth of blogging, industry observer web sites and other social media sites offers further insights.


But keep in mind that unless you also have a mechanism of incorporating all this information into your database, no single person – even the individual at the top – will have more that a few pieces of the total jigsaw puzzle. When a player leaves, so does his portion of the puzzle. And so each of you will be making critical strategic decisions that are base on only fragmentary information. (Is it any wonder that American business is a wash in endless meetings, trying to bring as much of that knowledge as possible together in one room?)


A well-designed, well-implemented database serves as the repository of corporate memory. And every customer-contact person in your company, from your service people to your telemarketers, should understand that part of their job is enhancing the resolution of the images – making sure each pertinent insight is logged into the corporate database, through whatever processes you devise. [please do not ignore, or ignore at your company’s peril the difficult issue of data hygiene and account maintenance!].





Step 3: Compare their needs to your strengths


If you’re typical, 80% of your customers buy from you for one or more of just a handful of reasons – usually, no more than four to six. What are they? And how well do they coincide with the external service values you consciously have worked at developing?


You may find that for some customers, the differential value you create may consist of quick response time, or quality of the product, or how often your rep calls on them (or conversely, how easy you make it for them to order via E-mail, minimizing disruption of their day).


In other words, one customer’s perception of the value you add may be another’s disincentive to buy from you; and it’s important to know which is which and for whom. The more you work with your database, the more leery you’ll become of single, anecdotal comments – that is, the tendency we all have to think that if one customer feels this way or that, it must be true of all.


In the course of the research, you may well have the pleasant experience of discovering strengths you didn’t recognize you had – or at least which didn’t seem as important. What matters, however, is what your best core customers think. If something is important to them, then it’s important, period. You should be nurturing it, refining your ability to deliver it and capitalizing upon it.


For most organizations, the great “a-ha!” occurs when you overlay the external service values you have deliberately cultivated, in which you know that you excel, over the matrix of your customers’ needs that you can begin to see where your marketing emphasis should be.


Step 4: Develop segments based on customer needs


You’re hunting for other current or potential customers who “look” as much as possible like your best, core, customers, those whose needs best coincide with your strengths – because it is within their ranks that you’re most likely to be able to develop still more loyal, profitable customers.


You may identify only one segment, your full universe of target customers and prospects – or to be able to recognize several clusters who share similar acts of unfulfilled needs and buying behavior. The process can be enhanced with the addition of complex basis variables. In either case, there are two key questions:


Who are those most loyal customers, those most interested in those service values that best differentiate you from your competitors? And what differentiates them from the mass of customers? When you have those answers, you’ll be halfway home.


Critical to effective segmentation is making each segment as unlike any other as possible.

And this is the point at which the process becomes more of an art (of interpretation) than a science (of data analysis). A well-constructed database, however, with its ability to slice and dice customer characteristics many different ways, gives you a wealth of tools to turn data into information. In developing the meta-data table, one visualization tool to use is the Rubik’s cube: it presents neatly both the concept of the multi-dimensional data cube as well as a method whereby your team can visualize the targeted account and the penetration strategy and its success therein.


To be of value to you, that information must be actionable. That means it must include a customer profile (most often consisting of firmographics, unfulfilled needs and buying behavior) that enables you to assign customers – not just your selected “best” customers, but all your customers, and perhaps prospects – to one or another of your defined segments. Keep it simple. The data collected and captured must be verifiable and updatable as well as meaningful and actionable. One note of caution therefore: trying to gather too many data points, or to use too many data points in the “business intelligence” algorithms, will have either diminishing returns or may provide no relevance.


You now have a good sampling of your best customers; each identified by the needs that are most important to them. (Keeping in mind that a customer, in business-to-business marketing is an individual who buys on behalf of an organization. Furthermore, recognizing that a customer is someone who buys x-$’s of y-products over z-duration). They are also tagged by firmographic data. Is there a relationship between needs and firmographics? Your database program can let you mine the information to find out.


Start with a list of identified needs and buying behaviors. Then query your database as to how many customers cluster into groups that care about each of various combinations of those needs. Where you find larger numbers, you have identified “need clusters” that are common to particular segments of your marketing universe. And that’s the raw material for needs-based segmentation.


Now, what easily identifiable characteristics do the customers in each cluster have in common, in addition to those needs? Here’s where firmographic data comes into play. You may, for instance, discover that many of them share geographical, SIC code, company size, or some other combination of characteristics.


In other words, it permits you to define very specific need-based market segments – into which you can divide your entire customer universe, present and potential.

Monday, March 30, 2009

Divide and Conquer Using an Actionable Segmentation Approach

“the answer is always already there.” J Derrida

“Temp untamed will hist for no man. As you spring so shall you neap.” J Joyce

Targeting, Segmentation and Grading (i.e., the valuation of customers, prospects and the “universe” from which to choose) are the primary building blocks of CRM and customer experience management. These are conscious decisions based upon business intelligence, corporate memory, and the on-going strategy of the business plan. Among these decisions, the single most important set of decisions any business-to-business enterprise can make are those involving selection - of the products and services you will provide, of the customers for whom you will provide them, and of the channels through which you will market them.

Accordingly, targeted segmentation to promote selectivity within your existing customer file becomes the most valuable application for your marketing database. More importantly, targeted, and actionable, segmentation drives effective CRM and Customer Experience Management efforts and allows for the optimization of your company’s market coverage models and investments.

Until quiet recently, most business communication with customers (present and potential), tended to address them as a great, undifferentiated mass…because there was really no practical way to do otherwise. It was the “We can be all things to all people” approach. Obviously, no business can survive and flourish if it attempts that approach. Limited resources: people, time, money need to be invested in direct proportion to the limited resources that can be applied – and accordingly, this is where targeting, segmentation and grading come into play.

Today, computer and business intelligence advances have made it easy and practical to break down the companies in your market universe just about as finely as you like, according to whatever factors you choose. Recognizing the fact that not all customers are created equal, it also allows you to target your limited resources toward those that are most potentially valuable to you. It gives you a practical alternative, and the next best thing, to one-on-one communication.

Divide and Conquer Using an Actionable Segmentation Approach

“the answer is always already there.” J Derrida

“Temp untamed will hist for no man. As you spring so shall you neap.” J Joyce

Targeting, Segmentation and Grading (i.e., the valuation of customers, prospects and the “universe” from which to choose) are the primary building blocks of CRM and customer experience management. These are conscious decisions based upon business intelligence, corporate memory, and the on-going strategy of the business plan. Among these decisions, the single most important set of decisions any business-to-business enterprise can make are those involving selection - of the products and services you will provide, of the customers for whom you will provide them, and of the channels through which you will market them.

Accordingly, targeted segmentation to promote selectivity within your existing customer file becomes the most valuable application for your marketing database. More importantly, targeted, and actionable, segmentation drives effective CRM and Customer Experience Management efforts and allows for the optimization of your company’s market coverage models and investments.

Until quiet recently, most business communication with customers (present and potential), tended to address them as a great, undifferentiated mass…because there was really no practical way to do otherwise. It was the “We can be all things to all people” approach. Obviously, no business can survive and flourish if it attempts that approach. Limited resources: people, time, money need to be invested in direct proportion to the limited resources that can be applied – and accordingly, this is where targeting, segmentation and grading come into play.

Today, computer and business intelligence advances have made it easy and practical to break down the companies in your market universe just about as finely as you like, according to whatever factors you choose. Recognizing the fact that not all customers are created equal, it also allows you to target your limited resources toward those that are most potentially valuable to you. It gives you a practical alternative, and the next best thing, to one-on-one communication.

Diving Back down to the 5 to 10,000 foot level

Enough of that for a time. So rather than stay at 125,000 feet "above the dust and smoke obscuring the horizon", let's get down to where we live.

Before getting closer to the dirt, "the dots" so to speak, let's make a quick detour at the 10- 15,000 foot level.  Here we are reminded of certain decisions, specific acts of selectivity that underlie our business model. Here we might say that:
Selection is the single most important decision the business makes.  

(At a minimum for 2 simple reasons: no firm can be all things to all people as once appeared to be thought. Every firm has limited resources in terms of time, money and people. 

At time of inception, and of necessity throughout its existence if it is to thrive and survive, the company has answered the following basic questions (see Value Migration for a deeper look into the basis of "pattern recognition" in business literature):

What business are we in?
Which Customers do we serve?
What control do we have ?
How do we make money?
What core competencies do we own , which do we outsource?

- you get it.

The answers we select are the elements of our business design 
( - a pattern that delivers relevance and value as defined by your customer  underlies the successful business design according to AS).

Now, moving closer to the ground level view:
When we build a customer-based,  customer-focused business design - at the 10,000 foot level - "selection effects every element of our business mosaic. In effect we are seeking to optimize our efforts, complementing the other framing work supporting this effort by ultimately managing the equity of our customers - customer portfolio management. 
What seems to happen at this level is that "targeting, segmentation and grading"  (or, valuation) become the essential tools for weaving this tapestry (maybe a better metaphor than mosaic - so, please: work with me here!).

In other words, I hope to demonstrate that operating under a  few key assumptions and using the tools of the integrated marketing and customer portfolio approach and the "systems thinker, we can identify " the dots" build our successful crm-guided business model, using the answers that are always already there

a little more about the bricoleur and how structuralist approach might provide the B2B CRM / CEM roadmap

the academic structural linguist describes their world using a few terms, their version of our specialized jargon then come into play. Four key ones for my purposes: syngtagm, paradigm, synchronic, diachronic.

The "syntagm" is our equivalent of "a sentence."

The "paradigm is "sorta like" the elements in each sentence, the cat chased the mouse (being the simplest example).

Individual elements are said to have syngtagmatic and paradigmatic relationships with one another.

"Synchronic" means (forgive me, if you already knew), of course, "at the same time"

"Diachronic" means "across time."

Obviously,(and without invoking Shroedinger's Cat) things alter across and during time. (For that last bit, read The Garden Of Forking Paths by Borges).

How the structuralists of the 1930's then put these framing theoretical concepts into place is most easily explained by these two individuals' usage.
The Russian folklorist Vladimir Propp used these concepts to describe elements in a his investigation of how the various elements of plot change  across folkloric retellings of an individual story. While, if we refer back to Levi-Strauss, his determined "desired end-state" would be to collect all the myths of each kind, on a file card, and cross reference them by element. (do I dare describe a multi-dimensional datacube?). Levi-Strauss hoped to discover "reality."

as Customer experience and customer relationship management reaches the strategists and CEO's, our suggestion is that this structuralist framework opens an entirely new, thorough and proven mindmap and roadmap along which to travel.

Our roadmap thus will look across the entire enterprise, using multi-dimensional, analytic tools and qualitative and quantitative research. One way in which to envision the results of looking at the functional areas under investigation would be to visualize a series of matrices, which overlap and identify dots (in my dot-to-dot game metaphor) , which then need to be connected and woven into the fabric of the mosaic we are creating.

Which gets me back to "bricoleur, who in addition to being a handyman, a tinkerer, is also a mosaic maker. Whew!

Sunday, March 29, 2009

the bricoleur, or a structuralist's approach to a roadmap to CRM and CEM

Claude Levi-Strauss (the Savage Mind and a View From Afar - among numerous other marvelous books) put forth a theory of knowledge based upon the structuralist theories of de Saussure and Dumezil (respectively the leader theoreticians in structural linguistics and structural anthropology/comparative religion). In a published he indicated that he wanted to catalogue all the myths of the world and overlay them one-up-the-other in as multi-dimensional a grid as man could imagine.
The result would be "reality". 

Sadly for us, Levi-Strauss never complete his proof before his death but his thinking challenges us to re-look at how we stand outside of ourselves, our business situation in order to see the details. We're proud if we're not limited in our thinking to seeing all the elements of our business model from a vantage of 75,000 feet.

Most of the time we're in the detail below 1,000 feet; sometimes lower.

What if is required is the ability that the structuralists propose which is to stand completely above it - is it 150,000 feet (you get where I am going)?

This vision for our roadmap to customer experience excellence "is easier said than done" and difficult to articulate in the abstract and complicated at its easiest points along the sojourn,(sorry). 

What I am proposing is that - while there is no cookie-cutter approach - I do imagine "the" (dare I be so bold) template which can be tweaked and that is something I would like to discuss.

This last note brings me back to "bricoleur": an intriguing word the structuralists love - it means a tinkerer: and that, I would propose is what all crm masters will and must be.

The Pyramid Principle and a short, light reading list (if I may) for the CRM practitioner

Hi again,
while out enjoying the brisk Wisconsin air (we had a "spring blizzard" last night), I came up with an idea I wanted to lay out.,
In doing so, I realize that I need to give some basis for what i will try to explain. So here goes, the list of books I would salvage over food if i had to sell my library.

The Pyramid Principle: I cannot recommend this piece enough for us who have to analyze and try to dissect and explain in crystal clear terms what we see in our vision for the desired end-state

then just a simple list:
The Marketing Imagination
Customer Connections
Value Migration
Segmentation Marketing
Customer Win-Back
Integrated Direct Marketing
Cost and Effect
The Service Profit Chain
Any work the title of which begins "the McKinsey..."
Concurrent Marketing (for my money the bible)
Segmentation Marketing
The BreakThrough Imperative
Metaphors we live by

thanks : and, in all honesty, I hope you find and peruse all these ,  cherishing what has been given for all to drink of ( sorry, if I mixed my metaphor there :)o

anything by Hamel, Porter and / or Slywotzky 

Customer Equity (portfolio) management, c: one of the business issues

The Business Issue
Since our portfolio of customers represents the primary asset that we must manage, we need to make the most informed investment decisions we can when it comes to investing our resources into this group of assets. Whether the resource is time, money, or people, the optimal allocation of resources is a critical issue, a critical challenge, for almost every business organization, since no enterprise has unlimited resources. The customer relationship marketing models, which have been refined during the past 25 years, provide a critical key to unlock the answer to this problem.
In no functional area of business is this resource allocation problem more true than in sales, marketing, and servicing customers and/or prospects. In fact, the search for the optimal allocation of resources in these functional areas is something akin to the search for the Holy Grail.
This resource allocation (and concomitant knowledge management) issue should be a Board Level issue.

Customer Management Centers: integrated Direct Model is a gold-mine

Call Centers, I mean: Customer Management Centers are the foundational operational hub of an integrated system and the Integrated Direct Model offers a gold mine to B2B businesses:

In business-to-business marketing, the integrated direct marketing model is a gold mine for the marketing group that wants to build sustainable relationships with the right customers.  The economics of the IDM model come from two primary facts:

1.    Marketers have come to realize that they cannot afford to invest in all customers and prospects equally.  In fact, acquisition efforts should be segregated out from cultivation and retention efforts. IDM allows us to do that.

2.    More expensive contact types, such as face-to-face or special events, can be leveraged with tremendous effectiveness by lower contact types, such as the Internet, E-mail, print, mail, and phone


Here’s what the integrated direct marketing process can do for you:


1.    Reduce the expense to revenue ratio by at least 15%

2.    Increase the number and frequency of value-based contacts to the right prospect or customer

3.    Increase the perceived service level at the point of contact

4.    Increase product penetration

5.    Increase customer loyalty


Additionally, in support of particular product lines, IDM ensures:


1.     Faster Introduction

2.     Higher amplitude

3.     Segmented and sustained market position


(Tracy, please photocopy the graph from AgriPassport volume 2, edition 1).


Quoting Bob Stone, long the venerable guru of American direct marketing, a definition of direct marketing must include three phrases: “interactive system,” “using one or more contact media,” and as must all direct marketing “effect a measurable response or transaction.”


IDM is not direct mail; it is not telemarketing; it is not transaction focused. The integrated direct marketing model is data-based and loyalty focused.  IDM is highly targeted marketing that uses an integrated, organized, planned system of contacts by which we make offers to individuals using a variety of media.  This system of building sustainable loyalty with our customers and prospects creates an on-going civil dialogue.  It is accomplished by integrating communication across all contact media - print, the Internet, E-mail, mail, phone, field events and face-to-face visits from the field force.  It’s defining characteristic is the delivery of relevant value.  The value is defined for us by our customers and prospects.  It provides for the delivery of relevant value-based information at the right time, in the desired delivery system, to the right individual that ensures interdependent relationships built over time.


The IDM model makes use of the marketing database as the repository of corporate memory, storing the results of all interactions with customers and prospects.


(Tracy: Insert the “nuclear reactor” model).


In addition to simple facts such as demographics and product usage, today’s sophisticated marketers are building database systems that capture the complexity of buyers’ needs and purchasing behavior along with relevant complaint and/or satisfaction issues.  The information then is available for product design groups, marketing, sales, research and other corporate functions. The database becomes the springboard for the organization’s need to be responsive, flexible, and dedicated to learning.  Through the technology of our database, we are able to store response data by individual contact within an account.  Moreover, we are able to measure our effectiveness relative to cost and to results. The measurability tracks profits, investments, expenses, account penetration (or, “share of wallet”), problems, issues, complaints and satisfaction.

IDM is a systematic method of getting close to our customers. Using this tool we can integrate our channel contacts and media efforts through a common database which is focused on our target universe.  Through testing we can validate results and expand our program and processes with great certainty.


The marketing database is mind of the IDM organization.  It is serviced by a proactive outbound call center (or telemarketing unit) which becomes both a listening post to customers and the dealer channel as well as a way to leverage the field organization in building relationships and selling products. In the IDM model the marketing database is shared with the field organization, tour channel partners, and all internal departments.


The essence of a successful IDM process is to capture, centrally, information about our customers and prospects at all points of contact.  The key to success then is how well the marketer can segment within a given target audience.  It is critical in the B2B arena to segment on similar sets of unfulfilled needs and purchasing behavior.  This allows us to understand our customers’ need and how they buy and then to market our products and services to these identified niches.


Once the segments have been identified (keeping in mind that the entire target universe may emerge as one large segment), the next step to take is to grade accounts within segments to ensure that the investment made is the least amount of money to strengthen the relationship with the particular account.


The grading model looks like this:


(Tracy, insert account contact matrix template from AP 2.1)


Grading is the economic modeling of the IDM efforts based upon an investment decision which takes into accounts the historical (actual)revenue and potential revenue from a particular segment of accounts.  In other words, grading serves the marketer as an economic and analytical tool which requires that we invest in the major segments we have created proportional to their economic history and potential.


Integrated direct marketing works both as a stealth defensive weapon, as well as a highly leverageable marketing tool. The competitive advantage it affords the skilled executioner is proprietary and affords increasing , not decreasing, economic returns. The fundamental concepts we use in loyalty-focused IDM include:


1.    Market to individuals  … not to corporations

2.    Address the unique set of needs of that buyer group (or application)

3.    Individuals are clustered (i.e., segmented) around common sets of needs which define a market niche

4.    All contacts with an individual, whether a customer or a prospect, must be of value as defined by them

5.    The technology we use is transparent

6.    Planning is critical

7.    Testing is mandatory

8.    Integration is the process used to ensure that the higher cost contacts are leveraged

9.    Properly executed IDM is a continuous improvement process that profitably drives business strategy

10. The investment made is proportional to the level of commitment to us


call centers ought to be called Customer Management Centers

I started in the "call center" business 30 years ago, helping to sell,  and implement, "call centers" to corporations such as IBM, Rockwell, Xerox, Honeywell and a few with names no longer even remembered such as Burroughs ...

It is time to raise the level of importance and recognize the fact that the Customer Management center is the repository of many of the details of the organizations knowledge of the customer and of its own policies.

Renaming the call centers as "Customer Management Centers" would announce something different both to employees and customers. I under the auspices of a management structure based upon the principles of the Service-Profit Chain will also change the culture and the performance of your employees and increase both customer and employee satisfaction and loyalty

Saturday, March 28, 2009

Customer Equity (portfolio) management, b

If my assertion  is correct, then the models, analytics and tools of the data-based relationship marketer / eCRM practitioner do, in fact, provide a “dot-to-dot” template with which to assure coverage optimization and hence optimal use of the firm’s limited resources. Over the next few entries, I will try to elaborate and illuminate this vision. In this space, however, I  can deal only  with a portion of the process issues and introduce an analytical framework. The technology infrastructure – data- warehouse, CTI for the contact center, the eCRM and/or SCM package are outside the scope of this discussion. 

In "my best of all possible worlds" , the Company's leader, the Office of the President, the CEO would have provided 2 over-arching frameworks in addition to using an equity approach to optimize profits and coverage.

Those 3 frameworks are best described in their original settings, the Harvard Business Review. 

The 3 frameworks of course are The Service Profit Chain and The Balanced Scorecard and what I describe simply as a modified activity-based costing model to understand market coverage costs.

Customer Portfolio analysis:

The value of our business is the sum of the value of all our customer relationships

Our customers represent a portfolio of assets that we must proactively manage in order to maximize shareholder and stakeholder value. A complementary truth is that virtually every organization has limited resources. So it is vitally important to invest those limited resource in direct proportion to the return we expect to receive from our investment in our primary assets - our customers.

Customer equity analysis in combination with a modified activity-based costing (to discover our cost-to-serve) can help us optimize our investment in sales, customer service, marketing and with our channels/ channel partners. 

The analysis also allows us to identify many of the particulate, the "dots", that we need to connect - and, that "are always already there"

Friday, March 27, 2009

Erratta or a nightmarish description of a Derridean after-thought, or Freud meets Derrida a minute ago(Freudian slip's errata)

That last posting says:

"No what could the defining father of French deconstructionism have to do with CRM? 

Did you do a double take, when you read that intro ? Did you just assume, rightfully i would submit, that I had made an error ?

Did your reading go like this:

"[K]no[w] what could ..."


"Now" what could the defining father of French deconstructionism have to do with CRM?

Personally, that was the reading I presumed I had left when I hit the publish button.


Sorry for any confusion. 

Altho  I now could either bore, illuminate, make your laugh out-loud or anger you with an aside about process mapping and white space and how my freudian slip of dropping letters would have allowed my hero for the moment , J Derrida, to connect Rummler_Brache concept of "white space" in process mapping "the missing space" - those alternative letters supplied  - and that when we need to connect the dots, the critical oversight would be if we have failed to examine the white space between all: but by now you've moved on and I have done those , or perhaps an alternative, three things.

The point of this is: The word is "Now"

Again, in life and in CRM:" the answer is always already there" 

Building a customer based and customer focused business model is complex but at the same time , doing it successfully is a "dot-to-dot" game

An actionable Roadmap for CRM and a Customer-centered, customer based business model

"The Answer is always already there", J Derrida

No what could the defining father of French deconstructionism have to do with CRM ?

I have to confess a quirky characteristic so that some of my "proclamations" appear to touch ground, lest they seem to come out of nowhere at all, let alone "left field"

Although I have been deeply involved and sometimes at the center of integrated, data-based sales, marketing, Call Centers and CRM over the past 3 decades, my background is as a student of structuralist linguistics and comparative anthropology.

With that aside, let me then add that I have been blessed to work with some of the world's leading creators of CRM and that putting it all together is just as simple as a dot-to-dot game.

Yes, each of you who reads this knows the results of the gartner reports: unfailingly disappointment is declaimed. 

Although building an integrated business model wherein (or, perhaps defined as a business model that is ) we have a customer-based, customer-centric business model  is as straight-forward and easy to complete as finishing an elaborate series of interrelated dot-to-dot games that touch and effect all elements of the business and, optimally, its entire value chain.

I believe it is predicated upon some simple analytical tools and methods, primarily originating out of Harvard. Tools such as the Service Profit Chain, Activity Based Costing and The Balanced Scorecard "Initiative".

Is our failure that we are unable to stand above the "dust and smoke obscuring the horizon to gaze upon the course of the world" (de Chardin) - too myopic to see all the pieces in this completely interrelated set of business principles and data practices and the social interaction implicit with our customers

Or have our software engineers convinced us that it is the package and not the integration of the processes, strategy, technology, people and learning that draw it all together into a successful whole.

Remember the value of your company is the value of all the relationships with all of your customers

It is not the sum of you physical assets

It is the customer portfolio which must be actively managed in order to optimize our market coverage models and our customer relationship and loyalty and excellence efforts

Some Working Definitions: T-A-S-T-E in CRM

Dear Reader:

Please add some relevant connotations and denotations to the working elemental definitions of 
Trust, Accountability, Support, Truthfulness and Effort
100% Reciprocally delivered between customers and "us", the service and product manufacturers / distributors, dealers, providers, : you got my drift

A few suggestions as to definitional implications might include (and you, the reader, certainly can add your own):

T (trust): 

Customers can be 100% assured that the banker is selling a product to you which will improve your financial position over the long haul


Customers can trust that personal information is held securely; that such information is not shared with anyone who doesn’t need to know; and, that all information will be updated and that data hygiene is emphasized by the bank


Bankers can rely on customers for full, honest and complete disclosure about finances and both short- and long-term investment / earning / cash-flow needs and requirements

A (accountability):

S (support):

            Customers can expect to have transactions completed accurately, as I            ntended and corrected if somehow a problem should arise

T (truthfulness):

Customers can rely upon full disclosure about risks, rewards, and other implications that pertain the financial transaction performed on their behalf

e.g., how many clients (aka, customers) understand that platform bankers are sales people with hard-driven sales goals and that there is an incentive tied to each sale.


E (effort):

Anecdotally, can we glimpse the how and the why T-A-S-T-E hasn’t come into today’s deregulated banking world since the days of the repeal of the Glass-Seagall act? For example, while researching the shift in banking 10 years ago, several key behavioral or attitudinal issues seemed to be at the forefront for bankers. Sales, personal information, and how best practices regarding sales, cross-selling of products, retention of the right core customers – all these and other topics were being introduced into the retail-banking world.


Changing the Game In CRM, prt 2: dis-T-A-S-T-E full CRM in retail banking

At the opposite end of the operational spectrum, however, if a bank were to implement CRM incorrectly – especially without the foundation of T-A-S-T-E - wrongly or in reverse (let’s call it: “anti-CRM”) can we see in that failure to be customer focused and customer based some of the root causes of the financial meltdown and freezing of credit markets?


Essential to building a successful business design and to successfully implementing a customer-based, customer focused business model and CRM is the definition of a customer!


CRM is a strategy based on customer focus, on customer knowledge, and on delighting the customer. CRM includes customer experience management, customer knowledge management as well as a portfolio management approach to customers. Additionally, effective CRM provides value – as defined by the customer - at each point in the customer’s lifecycle and allows multi-channel interaction (web, phone, in-person, social networking, etc).



CRM’s strategy defines how a company delivers value to its customers and profits and growth to the firm as it practices customer-based, customer-focused delivery of its products and services. Tied back to the strategy are issues such as business practices, training, communications, data, capture and use, business process, operations, compensation, etc. (viz., people, process, & data).



The benefits of successful CRM implementations are well documented. They include:

 1.  Increased sales

 2.  Increased profitability

1.     Increased product penetration

2.     Increased customer satisfaction and loyalty

3.     Increased employee satisfaction

4.     Decreased cost-to-serve

5.     Increased retention of the existing customer base during times of economic uncertainty.

6.     Increased likelihood of acquisition of new customers



T-A-S-T-E, I would submit, inherently lives in successful CRM practice.


Unfortunately, in today’s world of failed financial system T-A-S-T-E does not thrive as the motivating principle in Banking’s CRM initiatives whereas greed does. I believe that we can glimpse this failure in the operations of CRM in the home equity marketplace.

What would T-A-S-T-E “guarantee” for clients and platform bankers in the mortgage and equity business relative to the practice of CRM in the banking industry? Can we get a profound insight into anti-CRM in the banking industry by looking at how CRM can be bastardized in the Home Equity and Mortgage businesses of one of the major banks? And, can we see at work some of the greed that has been lofted to the pinnacle of reasons for the collapse of the credit and banking industries?

Changing the Game in Retail Banking and CRM

Changing the Game in 2009

Bankers need to Change the Game in their CRM Approach :

It’s really Time for a T-A-S-T-E-full approach to CRM in Retail Banking


In his 1987 work, Changing the Game, Larry Wilson coined the acronym

 T-A-S-T-E. It stands for Trust, Accountability, Support, Truthfulness and Effort.

The work was aimed at sales people and called out the need to “change the game” in multiple contexts of sales as the world was changing. That message was vibrant in those days but resonates with even more clarity in today’s “flat-world” that is defined in many ways by the web and the speed of light.


In 1996, Adrian Slywotzky wrote Value Migration, perhaps one of the 10 most important business books of the 90’s. In his book, Adrian demonstrated that one reason why market leaders had lost that lead and with it their market valuation was that they had failed to manage the ever-changing nature of value. “Value” is delivered through an organic whole, “the business design.” “Value”, of course, is a customer-defined concept, however, and one that changes virtually with each transaction a customer, or client, has with your firm. It was the failure of the automotives, companies such as DEC, US Steel and so many others that failed to monitor the change in value and as a result found themselves 180 degrees from their heights and in some cases out of business all together. Value is delivered both to customers, stockholders and internal and external stakeholders through the business design which effectively connects and stays connected to its clientele or customers.


In Slywotzky’s original work, and his successive work that build upon the concept he named “the profit zone,” Adrian clearly identifies the primary components of “the business design.” :


“A business design is the totality of how a company selects its customers, defines and differentiates its offerings, defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market, creates utility for customers, and captures profit. It is the entire system for delivering utility to customers and earning a profit from that activity.” (pg., 4).


Borrowing from Slywotzky and Wilson, we can make some sound observations about what needs to be embedded into successful CRM efforts as well as identify one huge potential for failure. Again, remember that in the overall context of Changing the Game, Wilson was talking about how the very nature of selling has to change. T-A-S-T-E represents 5 core values that must exist in a successful partnership and between and among members of a team.


CRM efforts today in essence are a business partnership, a teaming effort between customers and the business. Accordingly, the principles of T-A-S-T-E are essential within the interaction between teams, leadership and their followers and by extension between “us” and out clients or customers. The theme for Wilson, however, was how the “game” is changing for salespeople and organizations that are trying to stay abreast of, and to (the extent they can) anticipate what their customers will need, want and expect: in other words, value


To Wilson, T-A-S-T-E requires 100% reciprocality between both parties. When applied successfully there would be between both parties 100% trust, 100% effort, 100% support, 100% truth and 100% effort from both parties. In the context of account management or professional services, the value of this approach both for the team assigned to create and deliver the work as well as for clients more than likely is completely obvious, especially in today’s world. In a customer-based, customer-focused business design, one that effectively uses CRM as its underlying strategy , shouldn’t T-A-S-T-E be a primary principle and guarantee?


My simple answer is a resounding “yes!” In other words, in a successful creation and implementation of Customer Relationship Management this acronym has a firm place as a prime operating principle. And, I submit that nowhere does T-A-S-T-E have as necessary a place than in CRM in the retail banking world.