Category: Social CRM
November 23rd, 2009
Chatting (Not Chattering) About Salesforce - Part I
(NOTE BEFORE I START: This is one really long post. So rather than post it in all its glory in a single file or post it here over two days, I’m trying something new. I’m posting the first half here. And the second half on PGreenblog. Let’s see how that works.)
I’d like you to think about something. The Big 4 of CRM are considered the following:
- Oracle
- SAP
- Microsoft
- Salesforce.com
Salesforce has at best 1/15th the revenue of the smallest revenue of the other three. At best.
By no standard imaginable - except one - does salesforce.com belong in this list - especially IF size matters.
But that one factor is the combination of their continuing ability to at least be the leading market edge when it comes to recognizing trends and at best be the innovator and the creator of those trends. Plus the incredible energy and charisma of Marc Benioff doesn’t hurt either. ’Cuz if it were sheer numbers that determined the leadership - not just the shareholder value - there is only a big three - and little slightly more than a billion dollar salesforce.com wouldn’t be on that list.
But larger than (business) life they are - as Yoda told me just the other day.
So where are they with the release of what Marc called the “4th Cloud” Salesforce Chatter yesterday along with the other three - SalesCloud 2, ServiceCloud 2 and CustomCloud?
I’d say, at least if choosing my body of options, they aren’t creating the trends or innovating here. What they are doing is nailing what the trends are and being on the leading edge of those trends. That’s going to be the suit they wear in the post-Dreamforce 2009 world that we will all be inhabiting after this week.
Marc and salesforce.com have always had an uncanny ability to see the business world in its sexy glory. Marc put it well several times when he said that creating the company and the initial sales app/service were inspired by Amazon and the current incarnation of salesforce with its products etc was inspired by Facebook, Twitter and what pretty much amounts to the social web.
My take has always been that consumer thinking has penetrated the enterprise - been saying this since I was a young whippersnapper back in 2003. But salesforce.com has had a vision for years and been following through on that vision with an extraordinary rigor.
What is that vision, you ask? Well hop onto the Wayback Machine, Sherman and let’s go to 2003.
The scene is a hotel restaurant in Shanghai with men and women of mystery eating their breakfasts, talking to “someone”, murmuring under their breathes about important things. I’m sitting at a table with Tien Tzuo, the then CMO of salesforce.com, now CEO of the very successful SaaS billing and payment systems vendor Zuora. Know what he’s telling me?
(This is a paraphrase. Read the 3rd edition of CRM at the Speed of Light for the literal): “We want to be the place that all business people come to run all their business applications. We want to be the Business Web. We’re not just a CRM company.”
Guess what folks, while this may be an ambitious goal and one that they’ve tempered with the message that Marc peppered his two days of keynotes with at the conference that (again paraphrased) “we realize that companies will be running other systems,” this is precisely what they are continuing to drive for - with force.com and cloud computing. Have they succeeded? No, not yet, there is a long way to go, but they are walking on the same road - even trotting on it - that they were walking back in 2003. To those who say that force.com takes them away from their “core competency.” Knaves, you are wrong. Force.com is their core competency. (Boom. Fade to black).
Now, lets get on with it. For the rest of this post, I’m going to discuss their so-called 4 clouds. Service Cloud 2, Sales Cloud 2, Custom Cloud 2 and of course, Chatter, their 4th cloud. At PGreenblog, I’m going to do a piece on the back stories of the conference - like the analysts who were there in droves, the conference management, the meetings I had, and maybe even some of the parties. We’ll see. That’ll be out before Thanksgiving.
First, Is All This Social CRM? The 4th Cloud?
The answer - which will be qualified by the end of this piece - is “Yes” “No” and “who cares?” But I do want to start this by telling you that calling Service Cloud 2, Sales Cloud 2, Custom Cloud 2 and Chatter the 4 “clouds” are not clouds. They are either cloud services (Chatter), cloud applications (Service Cloud 2 or Sales Cloud 2), or platform as a service (force.com a.k.a. Custom Cloud). I don’t particularly like marketing like this because it just confuses a market with customers and prospects who are trying hard to understand what the cloud is. This isn’t the cloud. Not clouds. Niet wolken. No nubes.Keine wolken. ניט קלאָודס. 没有云彩
That’s my multi-lingual declarative and I’m sticking to it. Take me on if you want with some comments, but I won’t fold. Ironically, I did a webinar on the cloud for salesforce.com about a month or two ago that you can access here (registration is necessary). Listen and then tell me that those 4 things are “clouds.”
The Big Picture
While touted as game-changing, earth-shaking, revolutionary, and transformative, I didn’t see that. Other than the “apps are talking to me” I didn’t see anything that I hadn’t seen implemented somewhere else - and better elsewhere n some cases (I’ll discuss that later). But what I did see and was beyond impressed with was a fully integrated framework and architecture for social computing that integrates social CRM, and could easily enough deliver social ERP and social “supply chain” and social “anything you damn well want.” We saw that with the extraordinary - and I do mean extraordinary demo by Vetrazzo CEO, James Shepard.
Were they perfect and seamless? No. But after all the conferences I’ve attended this year of all the vendors, this was the most developed and integrated execution of an end to end contemporary platform I’ve seen to date. That said, it still was a demo with what seems to be a February through indeterminate 2010 release date. So how complete it ends up, remains to be seen. By way of comparison, Oracle Fusion, talked about for 3 years, which could be the competitive platform to this someday, is still in the “wait and see” stage with a demo of Fusion Apps for the first time at Open World 2009. For now, end of 2009 and into 2010, force.com, even with the problem of Apex as a proprietary development language, is going to be the platform to beat. (if anyone dares excerpt this in part, w/o the caveat, I’ll kick your butt.).
Also, the claims that were being made sounded a bit much at times, though not always by salesforce. One that particularly stood out was that Frost and Sullivan in a May 2009 report said that salesforce.com had 55 percent of the revenue from North American SaaS deployments of customer service. I’d love to see that Frost and Sullivan report and hear they came to that. I literally don’t believe that number - even if Frost and Sullivan “proved” it. Sorry.
So how does this all shake out ? Let’s break (dance) it out.
The Health of salesforce.com - Left Brain
The numbers speak for themselves. If you’re a fan of run rates they are at a run rate of $1.3 billion annually as of now. My run rate is about 4.5 mph. So you know where they and I stand in this. That’s all fun but a bad month can kill a run rate. But their actual numbers are pretty healthy too. Revenue for the 3rd Quarter was $330.5 million up 20%, beating financial analyst expectations by a little (I had no expectations - which is why I’m not a financial analyst) They now have 67,900 customers with 4700 new customers. They were slightly more profitable. All in all not a bad showing, which of course is why their stock price declined on the news of their improvement - nothing like Wall Street to ruin a party - except the ones they throw using their newly restored bonuses. (PG Safe Harbor: The previous sentence is a populist commentary, not an expert analysis. Thank you).
Service Cloud 2
When salesforce originally announced Service Cloud a year plus ago, I thought it was a good thing because they were filling out the portfolio for CRM at least with something that has been notoriously poor in CRM suites though it was offered, and for them it at least filled a major hole. Though I was, after an initial rush, somewhat underwhelmed by the first offering. with Service Cloud 2 they’ve filled gigantic gaps from the 1.0 version and they’ve added some integrated social features. They have the requisite Twitter integration, which is a perfectly adequate integration though frankly, the current stellar enterprise Twitter customer service integration belongs to SAP with the use of Business Objects Insight to provide a sophisticated sentiment analysis capability and business rules/workflow/alarms/triggers etc. Salesforce.com, of course, integrated Chatter functionality around things like case resolution for example (e.g. have a “service conversation” with not only the customer but with the managers and so that the triggers and alerts are visible as a subscribed feed. Again, you’ll understand what in god’s name I’m talking about a little later.)
They’ve also gone the “complete solution” route by allying with Cisco to provide a pre-fab contact center for small and medium businesses which is a very wise move on salesforce’s part as they continue to move upstream. This way they don’t lose the market that made them what they are - small and medium business.
One area that they’ve done extremely well in this release is built around customer knowledge. One of the reasons that customers are turning away from the companies and more toward peers when it comes to solving problems with products and services is that they don’t trust the companies to give them the right answer nor do the companies have the knowledge captured that they need to really help the customer. Plus the search capabilities for many of these knowledge bases is awful.
But rather than simply try to improve the quality of the knowledge presented to the customer from some internal source, salesforce has taken the most intelligent route possible by embracing this new paradigm and using the “wisdom of the crowds” (god. If James Surowiecki gets a royalty for every time that phrase is used, he will be richer than Ellison soon enough) rather than fearing it or trying to compete with it.
What they’ve done is create Salesforce Answers which essentially lies along the “engage customers through communities to help solve problems” spectrum. While this model in more specific ways has certainly become popular in 2009, Salesforce Answers is a relatively flexible option that is highly configurable to the customer service needs of the customer. Combined with Salesforce Knowledge their “multitenant” knowledgebase and their so-so Twitter integration, there is a lot of customer service value being provided, particularly around customer service engagement and self-service. Service Cloud 2’s concept is responsiveness, information and engagement.
My rating: A bloop single because of the improvements from the original Service Cloud, not because of its strength relative to other packages. Its only a hard line drive but caught there. (for non-baseball left-brainers 3.00 of 5.00; for non-baseball right brainers “not bad.”
Sales Cloud 2
Now we’re talking! This is actually more exciting to me than Chatter, and given my proclivities toward (oh-be-have) social “stuff”, that’s saying a lot.
Salesforce was always a leader in sales force automation. No doubt about that. They have had solid functionality, a tolerable interface as the tab pioneers and strong traditional SFA functionality. Of course, that meant that the functionality was geared toward sales management more than directed toward providing features that would be valued by sales persons. However, not only have they strengthened the management features, but they added features that were without a doubt aimed at providing what the sales person actually needs to do his or her job.
Are they the first to do this? No. Oddly Oracle was back in 2004 when they added a quote generating engine for their Oracle CRM (pre-Siebel, pre-PeopleSoft CRM). I wrote about it in the 3rd edition of CRM at the Speed of Light in fact.
But salesforce has done a major league job by improving on other quote engines by providing a real time quote engine. They model it, according to them, on the power seller paradigm that eBay uses. Meaning a few clicks and there is a quote based on the current pricing and configuration. Easy peasy, lemon squeezy as the Geico gecko says.
One major feature that I think is a vast improvement over past editions is the Cloud Scheduler. What makes it more than a personal information manager feature is that it allows scheduling with outside partners and customers pretty much using drag and drop. If your partners and customers - and of course - other staff are connected (opted in) then you can do what Outlook does with the “find best available time for all concerned” automatically.
Of course, they have the requisite Twitter integration, though aside from me not being particularly impressed by their Twitter integration in general, what its doing in a sales application beyond a monitoring tool, I have no idea. Even in their official press releases they talk about converting “Twitter conversations into customers” which is honestly, a crock. It isn’t an integration that converts a Twitter conversation into a customer. I’m glad you can integrate Twitter conversations of customers into the sales record but beyond that, so what?
Any salesforce Content Library document is available on mobile devices with this release which is a huge plus for those on the road all the time - which includes, what else - salespeople. All in all a smart feature.
That said, let’s take a brief look at the social integration of the Content Library. Salesforce claims that rather than just getting a presentation from a repository, you can now take a look at the content, see what others have said about it, find out which deals it was used on, solicit feedback on the value of the presentation or document given the opportunity and also collaborate on changes. While this is fine, it sounds like a somewhat less robust and thus almost dead ringer for Oracle Sales Library. So I don’t think this was inspired by Twitter and Facebook. Sounds more like it was inspired by Oracle. But, its still a good addition to the library.
Sales Cloud 2 actually is a significant step forward for this company formerly-known-as-CRM’s CRM SFA application.
My rating: A line drive triple into the gap, driving in at least a couple of runs. (for non baseball left-brainers 4.00 of 5.00; for non-baseball right brainers - really quite cool)
November 16th, 2009
CRM Association-Netherlands Rocks Het Huis!
I’m in love with Amsterdam….no wait, I love it but I’m not in love….no, hold on, I like it a lot, but I’m not in love, nor do I love it.
The Theory….
Interestingly enough (to me at least and who else am I really writing this for anyway?), while this may seem to be nothing more than the ramblings of an emotional confused sensitive male, during my speech at the CRM Association NL spectacular conference a couple of days ago I spoke about those very emotions as a way of looking at how granular the knowledge of emotional states are for each individual human being when it comes to truly knowing how you feel. Humans actually operate a.k.a. live with this incredibly complex knowledge of their range of individual emotions. This is not how many loyalty marketers look at it, though. While by no means am I opposed to the science of loyalty marketing, what I find as often as not is that traditional loyalty marketers tend to reduce their view the universe of human connections and relationships in scales - often from 1-5. Without any disrespect to those who don’t, a scary number of them see a “granular understanding” as a scale of 1-10 instead of 1-5. Metaphorically of course. Maybe.
(The problem is that loyalty (and advocacy) are the results of emotional connections to someone or something which can’t be truly measured on a scale of 1 to anything. For example, what can you tell me of the loyalty of a person who measures 4.2 on a scale of 5 versus the commitment of another person who measures 4.5 on that same scale? Nothing. Broadly, does it matter to me or you whether or not the demographic segment that this person represents scales at 3.8 rather than 3.6? If it does, please see someone. Really.
Again, putting my edgy New York sarcastic blade aside for a moment, the way customers actually work is to get involved with a company in a way that satisfies the emotional (and buyers) needs of some aspect of our personal agenda at some time and over some time. We don’t scale things. We say “they’re really cool!” Not “they’re just so 4.6.”
Chris Brogan, one of the social media mavens that I thoroughly respect and actually like too, told a story on Callie Lewis’s Geekbrief TV the other day about how a car service that that was supposed to pick him up to get him to Microsoft headquarters didn’t show. He tweeted his anger/anguish and a CEO of a national car service sent him a tweet with “here’s my cell.” Call it whenever you need a car and I’ll take care of it for you.” Car came, Brogan happy, loyal customer. As Chris rightfully said, “Yes, you may say its opportunistic, but he listened (to the tweet) and he solved my problem and now I’m loyal to him.”
That’s what I’m talkin’ about!
While this might be a long aside, a version of it was part of my speech and at the same time, I’m in love with Amsterdam and the Dutch and love the incredibly high caliber the CRM Association NL works at and I like the food a lot.
Amsterdam is So 5.0…err…Romantic and Amazing
I flew to Amsterdam as the second to last leg of “PG’s 41K Flyabout” I had committed to speaking there, which I felt I should as the EVP of the CRM Association of the United States. It was a fellow association, after all though 3700 air miles away. I was in touch with the man who has been its face for several years, Wil Wurtz, who also runs Metrics and More, a company that designs the measures for companies so that they have some idea of how they have to perform to make their customers - and shareholders - happy.
But I had never been to Amsterdam, nor had I known that much about the CRMA-NL except that they were expecting around 200 people at the event, pretty much 100% from the Netherlands.
The Practice
In Love
One of the reasons that I loved this trip was that I had the opportunity to meet both Mark Tamis, who came in from Paris for the event and Wim Rampen - who lives in the area. If you don’t know these guys, shame on you. Both are becoming key Social CRM/Social Business (call it what you will) thinkers in Europe and thanks to blogs and Twitter, internationally. You can find Mark’s blog here and Mark on Twitter here. You can find Wim’s blog here and Wim on Twitter here. This was my first opportunity to meet them. Mark got in early after a 6 hour drive from Paris and we met about 1 hour after I got to the Savoy Amsterdam Hotel (more on that later).
Mark graciously gave me a 5 mile walking tour of Amsterdam (he is a Dutch native living in Paris) that was not only great in terms of realizing the history of Holland and the remarkable nature of the the city but also a great chance to get to know this very fine human being.
Amsterdam is without a doubt a city that combines a remarkable history with a culture that might be unmatched anywhere in the world. Stunning churches with remarkably ornate rectories and ceilings that reached some point in the universe that was unviewable from the church floor - now museums. A culture that treated bicyclists as more significant than auto drivers. Thousands of cafes, restaurants, and bars, cobblestoned or bricked streets that saw human and bicycle traffic with the occasional car up on what you would think was a sidewalk. A people who are the tallest I’ve ever seen who drive cars half the size of what you see in the U.S. And are perhaps the most relaxed and funniest with, let’s say, a lusty sense of humor, I’ve ever met.
At one point, yesterday morning, I looked out the window of my room at the Savoy Hotel and I saw a light rain falling that had coated the streets - made them damp with a little glistening, rather than really wet. Across the narrow street were these homes/buildings with courtyard like wide alleys - most of them built out of brick in the 17th century - also damp. There were two bicyclists - one riding slowly and steadily up the street; the other walking her bike. I started thinking “Van Gogh could have seen this exact scene” - which was entirely true until the BMW drove by. But the charm and romance of the thought really nailed me. I just simply “got” the city and the people at that exact moment.
I am in love with Amsterdam.
Love
The CRM Association of the Netherlands (CRMA- NL hereafter), I would have to say, is the best organized, most substantial CRMA I’ve ever run across. Led by Wil Wurtz and Gerard Struijf, it has 200 member companies who support it wholeheartedly and in return it provides a range of services that any CRMA worldwide should be envious including this conference. This was a CRM Awards conference with awards for CRM Accelerator (went to UBS) and CRM Excellence (went to CarGlass) that are taken seriously. In fact, the only awards I ever saw taken as seriously were those that GreaterChinaCEM jefe Sampson Lee gave out at his conferences in Shanghai over the past few years to Chinese companies.
What also makes the CRMA-NL a gem is the way that they related to vendors. Unlike the incredibly ambiguous approach that U.S enterprise institutions have with the vendors - which is to treat them something like lepers with money - they treat vendors the same way as they treat practitioner companies - as companies who have something to sell because that’s what companies do. Meaning the vendor sponsors are as integral to the growth of the CRMA-NL as the practitioners and are treated as equals - they co-mingle. They can talk with each other about anything they want. Sponsorships can be from Microsoft and Accenture as well as ING or DSM International. It kind of simplies what I alwasy see in the U.S. with conferences - contortions on the policy toward vendor sponsors. Our Dutch compadres have practitioner sponsors too - because of the way the vendors are perceived - as a company rather than a predator.
Lest you think I’m going soft, I’m not. Any company will still continue to be the public subject of my ridicule if they deserve to be. But other than that, they are on equal footing to me too.
OK. Now that I’ve protected my manhood, I’ll continue on.
The conference was attended by both vendors and practitioner companies - mostly practitioners. I gave the keynote with a somewhat new version of the Era of the Social Customer (see below) -not the same as the one I did for the Lithium Social CRM Virtual Conference. I was told Dutch audiences are shy as an audience and direct as individuals. All true.
Here’s the presentation. (Note: There this is a slidecast with creative commons licensed music. Maria Daines “Rollin’” Get it here.
When it was done, I spent the next several hours (except for an incredible interview with Sales Exactly correspondent Marielle Dellemijn that became so interesting a conversation, I was interviewing her as much as she interviewed me) fielding questions from individuals - being challenged (a little) on ideas, and having amazing discussions with the practitioners.
I was truly impressed by the commitment to CRM that these attendees had - meaning they were spending money implementing social CRM and traditional CRM.
- DSM (which is an international company) is carrying out a significant series of social initiatives that they are linking to CRM systems - particularly in e-commerce run by the Director, Corporate E-Business, Marc God. They are as good as or better than any I’ve heard of anywhere.
- Financial services giant, Robeco has a department, led by an industry veteran, Gerard Wolfs, who’s sole purpose is to develop customer insight. Hear that? Not manage customer data, not use analytics per se - but to develop customer insight. An entire department. A whole department. Insight.
- The MC was a brilliant host named Rens de Jong. He is a radio personality and managing editor at BNR Nieuws Radio. Let me tell you, as a host, the man knows how to move a crowd. But more germane to Social CRM, he led an initiative at BNR, which is not a small entity, to develop a community of known listeners - and they are 4000 strong within a few months. Think about it. Radio listeners don’t usually have names and lives associated with them listening. They just listen. The only data that normally is gathered is transactional such as the data that Sirius/XM has for those who subscribe or the names of donors to National Public Radio (NPR) in the U.S. But with the BNR community we are talking about living, breathing humans.
- Carglass Nederland (which does car glass repair and is international) won the CRM Award 2009 for their company wide B2B and B2C implementation of an integrated customer centric strategy aiming at 100% satisfaction of customers. This involved all levels of the business and creative thinking around it. For example, if your windshield breaks while driving, they send someone to you to replace it on the spot. Customer experience indeed. UPC Nederland, a cable company won the CRM Acceleration award for their progress in their customer-centric implementation and strategy. Meaning they don’t allow it to bog down in the bureaucracy we often see when it comes to CRM programs.
Those are only a few examples. On the vendor side, Microsoft and Accenture along with BrixSoftware, a Dutch SugarCRM partner were particularly prominent. Martin Hermsen, who runs the Benelux CRM Practice at Accenture, was so astute and good natured that he got me a little closer to the “let bygones be bygones” stage with Accenture, with whom I’ve had a long standing animosity.
Okay, I know that this isn’t some big “how to” piece on Social CRM or related to the ongoing discussion in social CRM practice that needs to continue. Honestly, if you have a jones for that right now, you should be reading Graham Hill’s very important “A Manifesto for Social Business” over at CustomerThink, and (note I didn’t say “or) read Esteban Kolsky’s absolutely extraordinary and groundbreaking series of five posts on “The SCRM Roadmap” (it starts with #1 here). They are groundbreaking. Any one or all of them will take care of that for you - and I’m sure that I’ll have something to say to each of them because I never know how to keep my mouth shut.
But if there’s anything I think characterizes Social CRM or the whole science of CRM in general its that it is a science of business that attempts to reproduce the art of life. That means what actual people are doing to improve how we contact each other is what really is exciting. So when I am blessed (in a secular way, of course) with the opportunity to meet those who are doing it in the business world - who are real humans, and not personas or avatars, once in awhile I’m taken so much by the experience that I feel compelled to deal with it one of the ways I know how - which is to write about it. Because the human part of it, not the processes, measures, or technology, is electrifying.
Like a Lot
I have to say that the overall hospitality was pretty amazing too. The Euro-style hotel, the Savoy Amsterdam (which makes all the sense in the world in Europe), had the requisite small room,
Savoy Amsterdam - See how charming it is?
but unlike the Hudson Hotel in NY, of Margin of Utility infamy, the room was well laid out - i.e. I could get out of bed without smacking my head into a wall; and the amenities were meaningful - a free, full Dutch breakfast;extraordinary but low key service from the front desk; a free mini-bar. Even though the mini-bar was just a variety of alcoholic and non-alcoholic drinks, the idea was amazing. ”Free” and “mini-bar” are not a phrase you see strung together frequently. Additionally,
The Room - Smaller than it looks, but great
there was a free bar - a help yourself kind of bar in the lobby - though I didn’t partake. What was astonishing to me in the “like a lot” was the hotel exceeded my expectations, which had been tempered by the Hudson Hotel in NY, because it was supposed “euro-style.” Here not only were the accessories high end, but the value adds were wonderful and the service excellent - and most important, the room just big enough and comfortable enough to make its purpose successful - sleeping in it. Thus, the additional stuff went from being an ineffective mask like the Hudson, to a delightful set of additional benefits.
Enough No More
So, thank you to the CRM Association - NL. This was the best leg of the 41K so far.
The lesson on the Social CRM side, since I’m not supposed to be writing travelogues for ZDNet?
Loyalty doesn’t lie in stats or data, it lies in humans being human and how you apply your business principles to that simple understanding.
October 29th, 2009
RightNow Right Now is Right On
I know that I’m known as a tough critic and truth be told, I revel in it at times. I like finding flaws but not because I want to be mean about it but because I want the industry that I participate in, and hope I represent honorably, to be better and to provide what at least I think they should to the customer. So I look pretty deeply at the product claims and at the companies that are providing the products because I’m an ardent believer that the culture of a company needs to reflect what they are supposed to be providing to the customer when it comes to the aggregate of products, services, tools and most importantly to new business model paradigms, consumable experiences.
What that also means is that the company should be making efforts to align their culture and outlook with the contemporary mores of the customer’s world too.
If you accept the fact that the business ecosystem is centered around the social customer now, there are implications for corporate culture, that in my mind can’t be ignored by any company, and that would go for CRM vendors, as well as the practitioner companies who are trying to implement some sort of CRM strategy.
Those corporate implications for vendors (not just technology software companies, BTW) are pretty specific:
1. The products you provide need to be at least conversant with
a. the requirements that the social customer has - which in the current case of Social CRM, is something that allows the technology vendors’ customers to engage their own customers through multiple channels inbound and outbound - that of course is what we mean by “social”, isn’t it?
b. the idea that the customer wants to participate in their creation or, if not that (depends on the product), at least have enough real information, not just marketing collateral made available to them about the product to make an intelligent decision on how they are going to use the product. That means an authentic (for the word du jour) look at the product, including its immaturity. True product transparency is everything. It also means, if it makes sense, invite the customer into the creation process for the products. If it makes sense. Not if some pundit like me tells you that you should. At this stage, which is still early, it’s an optimal thing to do, not a requirement for survival.
2. The services and tools that you provide to the customer are what they ask you for, not just what you think that they should have. The voice of the customer, not just the one that is in your head, but the one that emerges from their actual larynx and vocal cords, needs to be engaged and listened to. “Listened to” means matched against your corporate plans and budgets and then implemented accordingly.
3. The consumable experiences mean that the type of message that you are presenting to an audience of customers and prospects has to be consistent and true to the actual experiences that you are providing to that same audience. In other words, as I talked about in my blog posting on the nature of new competition, the customers expect what you are telling them to expect. It’s truly eat your own dog food or, in my case, cat food.
This isn’t complicated. In fact, it’s pretty direct. But the implications are far reaching because there are many companies producing products that are in the realm of Social CRM, which means they fall between purely social and purely CRM or as we are starting to see with things that I saw, for example, a couple of weeks ago at Oracle OpenWorld, are truly Social CRM. Many of those companies are really cool or have great CRM groups but few, very few, have institutionalized capabilities and practices that reflect a deep (and usually somewhat or badly painful) cultural transformation that truly is one that means they’ve chewed a lot of Friskies.
I have to say that I think RightNow is making that cultural transformation.
Let me tell you why I think this.
Where Is Paul-o?
Currently, I’m sitting on an airplane heading back to Washington Dulles airport and home (using American Airlines wi-fi for the fist time - very cool) after having left the Broadmoor Resort in Colorado Springs Colorado. The place is stunning, the rooms are really well done, and the service level is beyond phenomenal. Since this isn’t meant to be a travelogue, what does make this important is that I was there for the RightNow User Conference in the U.S. as a speaker (did that on Monday to the Executive Summit of roughly 35 C-level large corporation executives) and analyst or, as my badge says, “Influencer” which I think is a term for, “what does he actually do? I’m not really sure….”
While their array of new and improved products is extensive and interesting, what I find is even more important to their potential longer term success is that they’re “releasing” a new culture and new set of consistent and authentic experiences that are associated with the way they do business. While it’s by no means perfect, it is one of the better and maybe the best (though that still has to be tested by time and results) alignment of a vendor culture with a message organized around collaboration with customers. However, I say that with caveats about the message (see below)
The History
Keep in mind, what makes what I’m about to describe even more incredible is that, as far as I’m concerned, RightNow has been struggling for the last few years to get their message right. They have always had a good, well engineered product when it came to customer service. It was solid; it was on demand; it was scalable. They pioneered the selective upgrade - meaning the customer got to choose what parts of the upgrade that they wanted to implement - if any - rather than the SaaS world’s ordinary automatic upgrade procedure back in the day a few years ago. The standard was that the customer had no say in the upgrade process and it was immensely frustrating to those customers sometimes, when customizations based on a prior version were wiped out. But RightNow changed the industry that way.
But about 3 years ago or so, they recognized that the customer experience was paramount and began to set up their messaging accordingly. They had always been a customer friendly company but understanding the customer experience which was step one wasn’t necessarily automatically associated with aligning your corporate culture with that knowledge.
I didn’t think then that they fully realized the fundamental truth about the customer experience - which was it was more the customer interactions than the customer transactions that would determine the customer’s relationship to any given company. The interactions were how the company and customer “got along” while many of the transactions were a reflection of that result. Like many of the more customer-centric companies who were still organized with traditional thinking, they still saw the world from the standpoint of the corporate ecosystem. That meant that transactions remained king. Improvements in the customer experience were still being seen as making internal business processes more efficient, or at best, effective, to free up more time to improve the customer experience. But the customer remained an arm’s length away from the improvements. This was best reflected in a statement I got from RightNow at that time that SalesNet had been purchased “to help improve the customer experience.” That is emphatically not what sales force automation (SFA) applications do.
But it’s a learning process, and to RightNow’s enormous credit, what they released at this conference indicates that they now have begun to seriously align their culture to the actual customer experience as it relates to an ecosystem dominated by a social customer. That’s quite remarkable because it is an indicator of the possibility of long term success, not just short term growth - and they are one of the few companies who seem to have made the effort and investment in doing that.
What Did RightNow Do Exactly?
Don’t get me wrong. This is a really healthy company - and given the recession, they’ve done very well despite it. They are now 800 employees; they are going to achieve around $150 million in revenue this year; they are cash flow positive; they are increasing 13%-15% year of year with their recurring revenues; and have around $100 million in the bank. That’s a solid, successful company.
Their new mission is to “rid the world of bad experiences.” Needless to say, I publicly asked them to support the Yankees in the World Series, because a series loss would be a bad experience for me, so we’ll see whether or not they truly mean what they say. You RightNow guys willing to stand by what you said? Go Yankees? YES!
While this is a lovely mission statement, it is more marketing than realizable obviously since that has been every single human reformer’s goal since time began and we still have a lot of bad experiences to deal with.
What is significant is what’s reflected by two announcements - one of which has a lot of fanfare and another which was not discussed all that much and got lost in the incredible volume of product releases and evolutions.
They also I think made one significant error and once again it’s in the area that they’ve made much of their mistakes - in their messaging. Plus they need to correct something or at least clarify something they said that I said.
But I’ll get into all that in a sec.
The New Releases
The total number of new and improved products was staggering and far too extensive for me to cover in this posting. I would generalize them in the following way.
First they made “experience improvements” which they structured around social, web and contact center (which I would personally call agent-centered) experiences. For example, they added new capabilities and made significant improvements to their Customer Portal, which should be used for web and mobile self service interactions. They added strong co-browsing capabilities (I’m not sure whether this was native or in partnership with LiveLook) and proactive chat for agents. This was part of their improvements in the “Web Experience.”
For all areas, they added design tools that use graphic interfaces and drag and drop functionality to enable non-BPM people to develop their own web, social and contact center experiences. A good thing all in all.
Second, they added improvements to what I call “human contact” capabilities. Ultimately, what we’re doing, even with the digitization of our interactions is still attempting to reproduce human contact. That’s why most of us love Amazon. It seems to be reflecting “human contact” though we aren’t dealing with humans. Our need for validation and acknowledgement is all part of how we socialize as human beings and the power of the social web is that it gives us the tools to get that through these one-to-many interactions with “strangers like us.” What RightNow released are tools to manage that human contact - such as their phone and multi-channel interaction management; or to understand how the human contact works using RightNow Engage’s analytics engine. They claim it delivers insight, which is probably a bit too strong - even if as good as it seems - it delivers information that can be used for insight. Analytics engines can’t deliver insight. Only humans can.
These are just a few highlights. I want to get into three more things - what I found to be the most important thing about what RightNow is doing now and into the future -then, their problem - and just a question or two that remains.
What’s So Good…
Now on to the two announcements that I think bode well for their long term success.
First, their September acquisition of HiveLive, a malleable, very intelligently constructed social network platform led to the development of products like Support Community and Innovation Community. What the community products do are exactly as you would expect. In the case of Support Community, they are providing a location for the customers of a company to interact with the company around customer service and support and are providing a forum for the customers to help solve each other’s problems. Innovation communities are places that are used are used for co-creation and product feedback and collaboration. They tended to emphasize the feedback side; I would provide more on the collaboration front.
What makes these releases important are the significant growth in business’ interest in communities because of the involvement of much of the population in some form of social network or another. About 74% of all connected adults participate in a social network of some kind - though, granted it leans more toward socnets of the Facebook variety - hell, not the Facebook “variety” - Facebook. But what this is doing is seasoning the population to use social networks which will be more likely than not make them more amenable to using communities and social networks beyond the firewall. In fact, Nielsen Global did a survey back in March that found that more people were communicating via social networks (66.1%) than via email (65.3%) for the first time. I may be off on the 10ths of a percent a little but you get the idea.
That makes the RightNow releases of support and innovation community building tools and actual communities significant and tuned into a growing trend.
But there is something far more important to the long term health, which was barely discussed at the conference. That would be the investment in hiring customer success managers. These would be individuals not working off quotas who, separately from account managers, would be responsible for the healthy relationship between particular accounts and RightNow. These customer success managers would be assigned to support the customer in ways that helped them succeed. I didn’t hear what they thought criteria for success would be but all in all this was an extraordinary move - one that indicates a deep cultural commitment toward customer collaboration and communications in ways that acknowledge the changing customer demand.
This makes me happy to hear because it reflects what goes on in the in-between. RightNow is starting to make the appropriate investments in transforming their culture to align themselves with the 21st century customer and what they require to satisfy their personal agendas - in a good way.
And Not So Good….
Despite all this goodness, I have a few concerns and caveats, though I will say, the positives outweigh the negatives.
First a correction. I was reading some material that they produced for the press and the analysts on why they are now Cx and “not CRM.” That’s one of my concerns but before we get there, the correction. In that piece they claim I said that CRM had a 70% failure rate.
I didn’t claim that. In fact, what I have consistently said, is that Gartner back in 2002-03 claimed that there were 50%-70% failure rates, but I saw that due to the immaturity of the industry and the customers’ buying into hype that led them to have dramatically escalated expectations about what CRM could do. Now, the success rate is around 55% according to varying industry sources (they’re in my book but I can’t check on who it was here). That’s due to - what else - the maturity of the industry and the leveled expectations that customers now have about its ROI. So please, if you see that, it ain’t me.
Now, Cx, Not CRM. Cx is the overall approach, vision and tools that RightNow is calling their contemporary offering. Cx has nothing to do with Rx - it stands for customer experience. But as Bob Thompson smartly pointed out in a Fireside chat with Greg Gianforte, the buying agents - c-level execs, etc. aren’t buying customer experience, they’re buying tools to increase their successful strategy. RightNow also insists they aren’t trying to create a new category with Cx. Yet the minute they said it “wasn’t CRM” - which is a category, that’s exactly what they were doing.
The problem isn’t with Cx which is fine as their vision and platform/tools. The problem is the “not CRM” part which is a no-win component and useless to say. They aren’t competing with CRM - or definitions of anything else. They are providing a solution set, services and something of a strategic outlook to the customer in the name of Cx. This is their classic messaging problem. They often put their foot up to their mouths - though not in it - and overextend or reach too far to fit something in that they really shouldn’t do. They did it in their earlier days with customer experience. They did it when they felt somewhat discomfited with the designation CRM and they are doing it with their approach to positioning Cx. It only muddies the waters with another acronym and limits their market a bit more than they need to. Just call it “Cx” and trash the “not CRM” part.
That isn’t huge per se but it does reflect a problem they haven’t gotten over yet. They need to deal with it or customer misperception will cloud their otherwise bright future.
Finally a couple of other answers needed. Estaban Kolsky someone that you should be reading if you’re not already, pointed out to me that there were no delivery schedules mentioned except 2010 - which doesn’t qualify as a delivery schedule, only a year. What is the delivery schedule for these services, and the customer success managers and the varying communities and their newer cloud product improvements? Hats off to you, Mr. Kolsky.
Also, what’s the VAR strategy? Is there one? What about a more open development model? These aren’t criticisms, just questions that are only either somewhat answered or still entirely open.
All in all, this is a HUGE leap forward for RightNow and what I think bodes well for them is that they take culture change very, very seriously - and seem to be doing what they have to do make it real - something we rarely have seen yet, in the era of the social customer.
Now, if they only eliminate the Phillies from the World Series to keep me from having any bad experiences….
October 14th, 2009
Oracle OpenWorld 2009 - Social CRM Technology Rears an Actual Head
I am almost always in awe of Oracle OpenWorld. The scope of this conference is spectacular. Can you imagine an event that the attendance is down to 37,000 attendees? Actually, that puts me in awe of their event planners more than even the event. How in the name of whoever can you put together something of this magnitude?
Back in 2007, I was also thunderstruck by the changes they made to their CRM products thanks to the team led by Anthony Lye. It was dramatic and it impacted Oracle as a company - and as it turns out, has had an impact on the industry as a whole. While I can’t remember exactly when they started calling it Social CRM, I do remember they had somehow understood that the customer’s requirements and demands and mindset had changed. They adapted accordingly - which was another source of astonishment because they were about the last company I expected to see this kind of progressive and valuable thinking from. But to their credit they did it.
While my focus has always been CRM, I have some experience with enterprise products generally, having built practices for a variety of them back in the 1990s and into the early part of this century - so I keep my eye on them. But the CRM transformation changed my expectations of what the company would deliver as a whole - ranging from their excellent CRM applications to their mysterious Fusion Apps (which are apparently going to drop at this show) to their entirely forgettable Beehive collaboration server (which I hope Oracle has forgotten too). Plus Larry Ellison’s flair for the dramatic makes me expect something remarkable.
Sadly, there was nothing remarkable presented, which is not a condemnation, just a fact. Outside of the CRM products (more on that shortly), what I’ve seen from Oracle so far (with the keynotes of Safra Katz and Charles Phillips) has been…..uneventful at best and pedestrian at worst. Not bad, just uneventful to pedestrian. The changes (at least generally) in their products have been incremental and small increments at that. Statements were made that were dramatic such as Safra Katz talking about Oracle’s “slavish devotion to Open Standards” but nothing dramatic actually occurred.
Don’t get me wrong. The keynotes by Charles Phillips and Safra Katz were fine if you were interested in an overview of what Oracle has been doing in the last year or so. The “keynote” by an EVP of Hewlett Packard was nothing more than a giant ad for Hewlett Packard, only interesting because of Oracle’s acquisition of Sun. Unfortunately, the wisdom of the crowds so to speak, supported me here because they abandoned the hall in droves during the speech.
including the growth of their retail business and the useful sophistication of their retail products - but all in all, nondescript is a good description (get the irony there?) of what I’ve seen so far.
Oracle CRM Moves Forward In Quality…And In Thinking
I will say, even with my narrow focused lenses, Oracle CRM stood far out far ahead of the rest of the Oracle Apps pack. Also let me tell you right now, I’ve been a retained consultant with Oracle though as you all know, that buys them nothing but a good job (I hope) by me. Not anything in these things I write.
CRM at Oracle seems to remain their star application, probably because it is, in 2009, the fastest growing application suite at Oracle and probably will be the Oracle revenue leader this year. That’s because they’ve understood what businesses need when it comes to being successful with customers. Note that I didn’t say collaborating with customers. That’s not what Oracle CRM is all about. They are really applications for sales and marketing effectiveness. They don’t have much to speak of in the world of customer service - with the exception of their tight partnership with Helpstream - an excellent move given their lack of native customer service apps. But they are doing what they do very well utilizing their existing Siebel applications expertise and their on demand applications in combination with a view toward internal collaboration at a company. Witness the development of Social CRM Sales Library On Demand in the last few months.
But what Anthony Lye, Mark Woolen, Christine Viera, Melissa Boxer and Adam May showed at an executive briefing yesterday on the advances in CRM was heartening because they are molding their CRM applications - traditional ones - with social and collaborative features that make them infinitely more valuable.
Anthony Lye, SVP in charge of Oracle CRM and the intellectual driver for much of this, started off with a discussion on the idea of reinvention rather than recovery as the strategy that companies need to take aggressively during poor economic times.
So far, so good.
He then framed the soon to appear demos by talking about what he saw as 3 game changing strategies:
- Executing the cross-channel customer experience flawlessly - Anthony distinguished between multi-channel and cross-channel (which was something like the difference between multigrain and whole grain) - multi-channel was a strategy that delivered an experience in mobile, field, community, call center etc. Cross-channel was a strategy to traverse all the individual channels at any given time by embedding processes to instrument business so that the customer experience was consistent. PG: While I thought the strategy was smart from a software and processes standpoint, I wasn’t truly sure that cross-channel was that much different from what I know as multi-channel. But regardless, the idea of a consistent (though he didn’t talk about authentic which is the companion piece of consistent when it comes to the customer experience) customer experience accessible whenever across channels was dead on.
- Tap into the power of the social web - this is the one that goes without saying and is the technological and process driven aspect of how Social CRM works - though by no means all of it.
- Deliver CRM data, when, how, and where users need it - this was the most interesting actually.
Anthony’s contention was that there were two types of relationships that CRM users needed to know when it came to customers. First, the explicit relationships - what kinds of communities was the customer associated with; who were his or her friends or friends of friends; the historic transactional data about the cutomer and the more contemporary profile data. But most interesting to me at least was his idea of the implicit relationships. These were not of the “who do you know” variety, but more of the “who do you look like?” When Mark Woolen, the always personable and very accomplished #1 VP for the Oracle CRM grouplet, demonstrated an app for a I presume fictional company though it was one that sold the iPhone 3G (S), he showed a button with the name “Connect to Someone Like Me.” When that button was pressed, it took you to a list of customers who were ranked by percentage of how close to your profile they were. You then could type in a question to ask of those like you. Great feature and entirely social in how it was connected. Built through the new Siebel toolkit I believe.
This is not a new idea. Political campaigns use micro-targeting to identify the lifestyle habits of their potential voters and identify blocks of voters who might all own Mercedes, be involved in social clubs etc. They then use this “implicit information” to figure out who those “similar folks” would most likely vote for, based on this kind of data. What Oracle is contending and I think rightfully is that the transactional data that’s been gathered by CRM applications can be used to find “someone like me” segments - and they’ve gone ahead used Siebel toolkits to build out what they claim here. Impressive and smart.
Melissa Boxer, who is probably the smartest person I’ve met anywhere when it comes to applying the principles of loyalty to enterprise software, demonstrated a genuinely fantastic iPhone application for Swedish Rail (SJ). Here’s a screenshot on that.
Swedish Rail Social Marketing iPhone App
What makes this application powerful is that it literally allows you use the points you have in a loyalty program to purchase items from Swedish Rail including tickets that are not only shipped right to your iPhone when you’ve used the points to buy them but can be redeemed via the iPhone. Additionally, you can make reservations directly and then have your itinerary delivered to your iPhone and if you choose to make it public so your friends (chosen friends) need to know where you are going - it can be delivered to Facebook for public or semi-public scrutiny. Swedish Rail then gets all this new data about your transactions and interactions and can use it to create targeted offerings on the spot.
Way cool and what social marketing looks like, albeit in a nascent form (so don’t get in my face about something that might be missing, okay? Nascent form.).
But Oracle is even doing more than that. They have done some I think is important with a traditional CRM application. They’ve extended Siebel with the use of a new Siebel toolkit that allows developers to integrate business processes and components into any framework whatever. That means the results of the development can be delivered to users via a widget, or an mini-application or a mobile app. But what makes this toolkit particularly important is that its got APIs based on RESTful architecture.
This is big for Oracle. The reality is that Sage led the way in the effective use of RESTful architectures and builds their current products on this simplified and yet powerful architecture. Unlike Sage, Oracle, and most of the other major vendors has been relying on service-oriented architectures which use far more commands than a RESTful architecture for their messaging and are considerably more complex. For the Siebel toolkit to use REST to deliver Siebel metadata is an important step forward in the world of CRM. It will allow for more effective and easily consumable applications when combined with the other piece of the Siebel puzzle - a visualization toolkit to change the interface to be appropriate to the delivery channel.
There were a number of other developments including a strong offering of Siebel OnDemand Release 17, which has added features that are most often found in larger on premise products including PRM, advanced analytics and what I think Adam Day said was the OEMing of Best Systems Marketing Development Funds program. and an increasing amount of vertical applications including a mobile pharma app for salespeople. All in all, there are 12 new products, 31 new features, 88 “customer-driven enhancements” - Anthony’s words not mine - and nine new integrations.
But to me the core developments are the improvement in true social marketing that recognizes the behaviors and activities of social customers. Oracle is using the traditional customer transaction data and the newe interaction data in an intelligent way tp micro-target and create “segments like me.” That’s really good for improving customer insight but what makes this truly powerful is that they’ve developed the channels and outputs to give the customers access to that same information by hooking them up with the people discovered through the micro-targeting efforts. Not only does the business gain insight, but the customer gains access. Truly multi-directional. In other words, this is what a technology can do to support a social CRM strategy. Everyone benefits.
So, hats off to Oracle now for conceptualizing and building a genuine social CRM application. But capital H Hats off to Oracle when they release it and get it beyond the demo stage. This is important and may be a paradigmatic set of CRM applications if it bears out in the real customer world as well as it seems to in the demo and development environment.
NEXT UP: Marc Benioff Speaks; Denis Pombriant and I speak; Larry Ellison speaks. Other OOW 2009 coverage worth following.
September 4th, 2009
Now I Know Why I Can't Stand the Washington Redskins
About 15 minutes ago I saw this story in the online version of the Sporting News: “Redskins suing fans who can’t keep their season’s tickets.”
I now know why I can’t stand the Redskins and their ownership.
The story is clear enough: The Redskins are suing 125 seasons ticket holders who they say wouldn’t work out financial arrangements with them to pay their multi-year seasons ticket contracts. The Washington Post, publishers of the original story, had interviewed 20 of the season ticket holders most of who claimed that they had lost a job or had some sort of financial hardship. The Redskins claimed they attempted to work something out but the ticket holders said in response that the payments were too hefty for them to afford anymore.
Okay, its bad enough that the Redskins, who are wildly popular in D.C., would probably have not all that much trouble reselling the seats, though admittedly that’s a presumption, but it was the following comment that just reminded me why I am no fan of this club.
“The Post reviewed lawsuits in which the Daniel M. Snyder-controlled entity WFI Stadium Inc. sued 125 Redskin ticket holders for a total of $3.6 million. The team won judgments totaling $2 million from 34 season ticket holders, most of whom did not hire an attorney and defaulted by not making an appearance in court.
(Redskins attorny David) Donovan said other teams sue their fans. “I don’t know of any pro football team that doesn’t,” he said.
The Post, being intrepid, went and asked other teams if they sue their fans since they clearly weren’t going to take the word of David Donovan. They found that the Baltimore Ravens, Cincinnati Bengals, Green Bay Packers, Houston Texans, Jacksonville Jaguars, New York Giants, New York Jets, Seattle Seahawks and Tennessee Titans, don’t. So much for Donovan’s blanket statement. The Patriots said they sued and the Chicago Bears said “yes, rarely.” The rest of teams either declined to comment or didn’t respond. So of the 11 responses, 9 said they didn’t sue. Hardly an overwhelming statement of support for Attorney Donovan’s “they all do” comment.
Does that mean that others do? I imagine so. But apparently Redskins management don’t talk to the 9 teams that understand that hardship actually is hardship and their fans can undergo it. Reality is that even in hard economic times, there are enough people out there spending oodles of money to cover the lost ticket contracts.
From the standpoint of the customer, what should a team say when these situations arise?
We love our fans but are perfectly willing to destroy their lives because they are unable to pay for something we are likely to resell?
OR do you think that they should do what the Giants (disclaimer: I love the Giants) and others did and simply reclaim and resell?
The question is how the fan experience is impacted by a team that you love and root for enough to purchase a multi-year very expensive package so that you can attend games - a discretionary expenditure to say the least. But if you lose your job, should the team be compassionate and let you slide and just repossess the tickets or should they sue because you’ve signed a contract?
Technically, they can sue and likely win judgments. But from my standpoint, they aren’t going to have a problem selling the multi-year seasons tickets to another Redskins fan. So suing and winning and then reselling they get twice the (ill-gotten in part) revenue.
Way to go Redskins. That’s why, even though I live in D.C. I will NEVER root for you. You don’t understand your own incredibly devoted fans. Which, given present management, is no surprise.
This is a true FAIL for customer relationship management.
August 31st, 2009
Voice of The Customer: Speech Meets Larynx at CRM Evolution 2009
Last week, I keynoted the CRM Evolution 2009 conference - probably the best conference I ever attended, though I was biased because I also chaired it - first time I ever chaired a conference - so I had the opportunity to be a participant in more than just the speech.
But the keynote wasn’t just for the CRM Evolution conference; it was a joint keynote for CRM Evolution 2009 (get all coverage here) and SpeechTek 2009, the annual best attended speech technology conference (get some coverage here).
So I had this dilemma. What can I say to a joint group of people with diverse interests that would interest both without watering down the message? Honestly, it took me WEEKS to solve this one. I truly had no idea beyond a mundanely clever title for the presentation - Voice of the Customer (get it?).
But after awhile I realized that I was thinking about the whole thing wrong. I was trying to appease the dual groups rather than realizing that my actual job was to get across my idea in their metaphor. AND that there was a common glue that bound both audiences - they were all business people who needed to engage customers.
The ultimate difficulty was combining the metaphors in a way that would attract both audiences. The idea remained the same and its one that I preach constantly - “the social customer is the customer of the 21st century and they demand engagement and knowledge that they need to accomplish a piece of their personal agendas. In order for you as a business to provide that you need insight. That means data needs to be captured and analyzed. But data is no substitute for human judgment, merely an aid to it.”
Here’s my presentation. I’m doing this because I got the idea when Michael Krigsman, our ZDNet compadre who has the world class IT Project Failures blog, did the same for his presentation at CRM Evolution last week. Please let me know what you think. This was slightly uncharted waters for me, so I can stand to get some pointers on where I might have done better - both on the ideas and the style of presentation. Though I do admit, that I think its pretty good.
August 20th, 2009
Deconstructing United Airlines: Where Customers are Transactions
United Airlines: Customers are Merely Transactions
If you’re a loyalty marketer and look at my United profile, you find something that would make you 4.5 on a scale of 5.0 when it comes to warm and fuzzy. You’d see hundreds of thousands of United Airlines frequent flier (FF) miles; a pattern that suggests that I fly exclusively, including client bookings by their travel agencies on United for me; you’d see signing up for dozens of promotions; you’d see using hotel loyalty cards to get United FF miles in the place of hotel points; you’d see me flying United partners Star Alliance airlines whenever I can’t fly United. You’d also see about 50-75,000 miles per year over the past few years. I’d look like a very loyal United flyer.
I’ve been Premier Executive for a few years, which means that I flew 50,000 miles or more each year. But in 2008, I had a horrible auto accident in August that limited my flying to virtually none for the rest of the year. As a result I flew 36,000 miles which brought me down a notch to Premier. But by November 2008, I was okay and I had booked and paid for 26,000 more miles of flying from January 4 though Feb 15, 2009.
That sets the stage. Oh, one other thing. United’s timeframe for determining FF status is from January 1 through December 31. Status privileges run from March 1 through February 28.
In any case, as late November 2008 rolled around, I received a letter in the mail from United Airlines. In effect, it said:
“Hey, we see that you only have 36,000 miles this year which will make you a Premier rather than a Premier Executive flyer. Tell you what, you give us $2300.00 and we will give you the additional 14,000 miles that you need to be Premier Executive. How about that?”
I swear. They wanted me to pay $2300. I was….incensed…and I’m only saying “incensed” because of my PG-13 rated worldview. I mean, can this approach be much more disgusting….and, for that matter, out of touch with the reality of a customer?
But, then the real question is what should have happened?
If I were United’s Vice President of Customer Experience (I believe that they’ve had four of those in five years though don’t hold me to that exact number), I would have an algorithm or two that would pretty much spit out the same info as they had. But then I would have had a plan to address the issue that wasn’t “send us $2300.” It would go something like this:
“Hey, we see that you only have 36,000 miles this year which will make you a Premier rather than a Premier Executive flyer. We’re concerned. What happened that caused you to fly so much less?“
Let’s assume I made the choice to respond to United and told them what happened. At the point I understood that Paul’s Acura had stood in the way of his flying in 2008, if I were United, I would also check to see what Paul’s history is and future bookings are. Then, as United, I probably would notice that Paul Greenberg had paid for 26,000 more miles for January and February. In other words, traveling that much before his 2008 official Premier Executive privileges ran out. Then I, United, would send another note in this spirit:
“Hey again. Since you’ve been a Premier Executive flyer for a few years and you couldn’t help your circumstances and you’ve already paid for 26,000 more miles which would total 62,000 miles by the time your privileges run out, we’ll take a chance on you not canceling those bookings (PG note: I didn’t cancel) and extend your Premier Executive flyer privileges another year. We’re very sorry about your accident.”
They didn’t do that but instead insulted me with their “offer” to let me pay. Rather than me moving a bit closer to being an advocate, the result I truly dislike United. Though my loyalty numbers don’t show that, do they?
Lesson #1 For United: What Should Have Transpired
The key to this isn’t the offer to keep me Premier Executive for another year. That isn’t that significantly different than Premier when it comes to rewards. It’s the note to me asking “what happened?” Rather than the:
“Hey, we don’t really care that something might have happened to you to break your recent historic patterns, we are only interested in getting something from you in return for letting you ‘keep’ the privilege of your status.”
Contemporary customers demand some sort of human or at least seemingly human interaction with the companies that they frequent for more than a utility purchase. United still sees customers as transactions. Thus, I look entirely loyal because of my “transaction numbers” e.g. amount of miles etc. But my behavior is driven by inertia - the cost of my investment and the cost of change outweighs the effort I can afford to give it now. My emotions are driven by disgust for the very company I look loyal to. AND, because I have a wide number of venues to write for and speak at etc. every year, I get to use United as a lesson in what not to do when it comes to engaging customers in front of what amounts to hundreds of thousands of people. Not exactly good but you wouldn’t know from the numbers.
Yet Another United “Customers are Transactions” Story……
A dear friend of mine is a Senior VP at a major government contractor here in Washington D.C. She passed on this United story - in fact the trigger for writing this piece.
“Hi Paul….If you recall…last year there was a problem with one of the so called “customer vouchers” for my son. It was issued to my son when they had delayed his flight (their errors) for about 10 hours. When I called about the voucher being basically impossible to use (required to physically go to an airport and present it versus use it online), United gave me the run-around, I asked to speak to a supervisor….and UNITED transferred me to American Airlines.
Well…now they have changed their frequently flyer program and cancelled his points. Now cancelled in 18 months vs 2 years. I spoke to a manager…and got the run-around again. Bottom line zero points. Oh yes….for $350 they will re-instate his 25,000 points.
The United Customer Service Supervisor said they changed the rules for frequent flyer points in January 2007…reducing from 2 years to 18 months. In January 2007, (The boy) was a Junior in high school. He was not keeping track of United’s frequent flyer changes. I don’t keep track, because unfortunately - I fly them. He lost a round-trip on United that he could have used to visit his Grandmother. Verbally they said we could buy the points back for .0125 per frequent mile PLUS an administrative fee - but we can only do this online. My head is spinning. Gee - maybe I could use the $150 voucher that I can only use at the airport toward this - ha ha ha.
United gets a grade of F for customer satisfaction. They really don’t care - I say….let’s all go fly Southwest. They care about their customers.”
United Lesson #2: What Should Have Transpired
There’s so much wrong with what United did here.
First, transferring the customer, out of pique one can only presume, to American Airlines, is problem #1. Second making the use of a voucher difficult rather than easy is problem #2. Then cancelling a kid’s points and then saying, “oh, we’ll reinstate for $350,” is problem #3.
Wow.
Its easy to make the case - at least easy for United - of “well, them’s the rules, boys and girls. You gotsta follow the rules. The timeframe for use of FF points was over.” And, if customers are transactions they may be right. But sometimes, the human circumstances and reality (a reality that of course United banks on), merit an interaction rather than a transaction - meaning, you find out that most people aren’t that aware of rules changes and there had been a lot of grief and angst associated with the chain of activity on this particular situation, calls for a bending of the rules.
What the problem is here is not necessarily just a bad set of circumstances with a customer. There was a bit of this that was just outright stupid - the transfer to American Airlines instead of a supervisor. But most of this is due to a rigid set of broken procedures.
First things first - there needs to be a way to use the voucher online. United makes a point of encouraging the use of online reservations as a cost savings measure for them and a benefit to the customer - and online Easy Check-in is one of the few good things about United. However, making it impossible to use the voucher online goes against what they want to begin with and only makes it more difficult for the customer to use a benefit that they got in return for something that was a discomfort to the passenger to begin with.
Second - Given the particular circumstances, someone should have been made available to the customer who was empowered to restore the points. No one is saying do it uniformly, but, United, you need to remember that customers are looking for personalized treatment and when a circumstance that allows it arises, be smart enough to be flexible - rather than looking like an organization that, once again, sees the customer as a transaction. The answer here should have been, “okay, this once, we can restore the points, given everything else that happened, but it is an 18 month limit now and please be aware of that for the future.” Rather than “it’ll cost you $350.00″ - apparently a familiar theme.
And Yet Again: United’s Broken Guitar - The One We All Watched
I think we’re all familiar now with “gone-viral-on-YouTube” video “United Breaks Guitars” which has gotten over (there is no past tense on YouTube only past perfect) 4.8 million hits since it went up. Here it is if you haven’t seen it. I don’t like country, but I did like this.
It was amazing enough that it took United more than a year after the guitars had been broken and numerous complaints and a refusal to pain as their final answer originally to finally agree to pay for the broken instruments. Which Dave Carroll of the Sons of Maxwell (the Nova Scotia based country group that had the guitars broken) didn’t want and had donated to charity. But that wasn’t enough. Listen to this incredibly lame response from United:
“‘While we mutually agree this should have been fixed much sooner, Dave’s excellent video provides us with something we can use for training purposes to ensure that all customers receive better service for us,’ spokeswoman Robin Urbanski told the (Chicago Sun Times).”
Not the response you wanted to hear.
United Lesson #3
The only thing I could call this “official” response is cowboy bootlicking contrition - it sounds insincere and actually doesn’t address the problem. While its great they are going to use the video to train, what about the processes and the hiring policies that led to this happening in the first place. A humorous video that gained a lot of attention isn’t the training I want to be giving. It may be funny to watch and a nice little public relations ploy, but as a customer, I’d rather hear about how they were overhauling their customer service policies given the number of complaints they get on a daily basis. And the massive mistrust that they continually engender. But then, that’s just me.
What United should have done here is pretty obvious. Pay for the f—ing guitar when it broke, not when it became the subject of a clever viral video. The damage was done by that time. Additionally, they should announce significant changes to their customer service training and policy and be transparent about them.
What United seems to be overlooking in their training mea culpa is that not only was it broken due to gross mishandling by some employees apparently, but they refused to pay for it - a management decision. This video being used in training doesn’t change their policy. Which simply should be if they break it they should pay for it.
And Another…..
This one is short and sweet. Last fall, their Chief Customer Officer, Graham Atkinson, left United and Dennis Cary became the Chief Customer Officer.
United Lesson #4
Unfortunately, for United, Dennis Cary is already their Chief Marketing Officer. The fact that they are combining the two positions is another egregious example of their incredible lack of understanding of customers. CCO and CMO are NOT positions that live in a single human body. They have vastly different purposes and can even be at odds. This is nothing disparaging to Mr. Cary. I don’t know him so I’m not speaking to his qualifications for either job. But he shouldn’t have both. A Chief Customer Officer is, when appropriately tasked, to engage customers in the kinds of interactions that make them advocates of the company at a programmatic and policy level. Those policy decisions and “rule bending” that we’re talking about are a CCO’s responsibility - and should be as far away from marketing as possible. The irony is that the message that the combined positions sends is that to United customers are nothing more than objects of marketing. Transactions again. You’d think marketing would figure that out…..
Finally….One of the Worst
What makes this final United story totally ironic in addition to being a serious problem is that it happened to my wife and mother in law yesterday as they were heading to St. John’s Newfoundland via Montreal beginning at Dulles. In other words, while I was writing this.
To put it simply. My mother-in-law is 86 and needs a wheelchair to travel. United is required to have a wheelchair, if requested, available to her at the gate when she leaves the plane. We requested the wheelchair at Dulles airport, they called it ahead. According to Air Canada, United should have finished the request so that she was covered when she got to Montreal and then St. Johns.
Well, there were delays due to mechanical issues on the flight to Montreal and they got in but were unable to make their connection (they had a 15 minute window after they landed). One of the reasons, aside from the incredibly short time was that there was no wheelchair waiting for my mother-in-law and ultimately they didn’t really have one for her. My mother in law of course was discomfited by this whole fiasco. My wife managed to commandeer a wheelchair later without United’s help. An Air Canada representative was good enough to help them and told them that the flight attendants on United are aware of special needs passengers as are the ground personnel and since it was going to be delayed obviously, the United ground personnel should have made sure that a wheelchair was waiting despite the delay. There wasn’t one and not much interest in helping them either.
United Lesson #5
Aside from don’t mess with my family, United should have done what they should always do. Accommodate change. If there is a special needs passenger known to them and a problem that they cause one way or the other, then they need to make sure that there is a smooth and seamless transition so that the customers aren’t discomfited. Not that big a game plan for that. It would have taken a phone call to say, “hey, there is this special needs passenger on the flight to Montreal. The fight is 2.5 hours delayed. Can you makes sure that we still have a wheelchair waiting?” Not that tough to figure out.
In Sum
The heading of this final section is ironic. Because “a sum” is exactly how United views its customers. Its why United is continually one of the lowest in customer satisfaction surveys and is beaten up continually in the cybersphere. They are going to need a fundamental culture shift to recognize that the customer - the social customer - is looking to have them provide the kind of experience that excites them to be associated with United rather than repulses them. So Dennis Cary, stop looking at the numbers that your loyalty people throw at you and instead talk to your customers in a serious concerted way and then, listen to them.
I’d love to lay out a few of them here, but why should I? Hmmm, maybe for $2300 I’ll do it so I can afford to be Premier Executive again…..
August 3rd, 2009
Inside Curve: Lane Bryant Scores Plus Plus
Who doesn’t love style and fashion? Well, I suppose I don’t love fashion, judging from my incredibly poor clothing selection skills (I rely 100% on my wife, who has mad skills when it comes to picking out good looking clothes) but I am in love with style. I love to feel cool. In my case this translates to gadget head stuff, but in the case of many, its clothes that make the hip man or woman.
But oddly, despite the fact that clothes and styles are a primo topic of discussion both at schools, on the street, while watching makeover shows, or “Who Wants to be the Next Supermodel,” there have been no social networks or communities built around the retail apparel world. I’m not saying there isn’t innovation or there aren’t Facebook pages. Retail apparel companies galore have Facebook fan pages and they tweet. J.C. Penny’s has a Facebook page targeted at teens that links back to an ecommerce site for back-to-school clothes. American Eagle has Mike Dupuis, a VP of Digital Marketing who works their Twitter, Facebook etc. strategy. Bebe’s, Candie’s and other apparel - especially younger apparel stores/chains have some presence on social networks of others creation.
But I gotta tell you, its taken a visionary dude that I met when both he and I spoke at the Global Retail Marketing Association (GRMA) - an rather astonishingly interesting association run by Stephanie Fischer - national conference in April to take the retail apparel world where it’s supposed to go with social networks. That would be Jay Dunn, VP of Marketing at Lane Bryant, who, today, is hard launching Inside Curve - a social network, sponsored by Lane Bryant, for plus sized woman.
What makes this important is several fold (please see my article later this month on vertical communities at SearchCRM for more conceptual detail):
- Apparel of any size are an emotional buy - totally tied into style, look and feel, and even identity and self-worth. Studies have been done that show how emotional this actually is. One 2008 Fitness magazine study of woman who were trying on clothes in stores found that 64% (80% among those who thought they had to lose 30 pounds or more) of the women felt that shopping for clothes was bad for their self-confidence; 10% admitted to crying in the dressing room. Even trite expressions are tied to this intensely emotional activity and product - “clothes make the man.” Of course, if that’s true then I’m in real trouble. Sniff.
- Buying clothes is something that is important for socialization. Multiple studies since the 1980s and through today, have shown two things - 1. What kids wear is important for a child’s socialization into the world of other children; 2. Buying clothes without their parents, with their own money is one of the more important acts of growing up as an independent person for a kid when they reach a certain age.
In other words, clothes - how you wear them and what you wear are a deeply personal part of a person’s life, and, unless you’re a nudist, skinny dipping or having sex (at least most of the time), a necessity of ordinary life along the lines of food and shelter.
So what’s the Inside Curve story with all this?
A Really Good Inside Curve
Let’s face it. Plus sized women don’t fit the stereotypical view of the perfect body. The fashion industry to give you a number, says a plus sized woman is size 14 and weighs 162.9 pounds. Let’s hear what Jay has to say which will give you an idea of the beauty of Inside Curve as a community.
“The plus-size woman has been excluded from mainstream media, fashion, and advertising for 4 decades. If you think back to the 1950s and early 1960s, the icons of femininity were voluptuous women such as Marilyn Monroe and Sophia Loren. In 1966, Twiggy hit the scene and the “thin is in” movement started and continues to this day. Kate Moss is Twiggy reimagined.
“The psychology of the plus-size woman has been altered by the fashion industry’s insistence on “beauty” as “thin.” As you look at the blogs and social networks you see those women have an immediate bonding, a commonality, a shared experience of exclusion that becomes the foundation of community. A “community by exclusion,” if you will.
“An interesting aspect of exclusion: when enough of the “excluded” bands together, their identity can change from “exclusion” to “exclusive.” Suddenly, a new tribe develops, with a language, rules, desires, and needs based on shared experience. And if you’re not one of them, if you are not a size 14+ woman, you do not belong. It is the power of the tribe, and the psychology changes from one of weakness to one of authority.”
What Jay and Lane Bryant had to consider was how do you turn what organically was a community of exclusion and institutionally make the membership a powerful organized voice.
Lane Bryant
Keep in mind, Lane Bryant is hardly a stranger to the world of the plus size woman. They actually invented both the concept and the clothes. They have over 800 stores located throughout the U.S. that deal exclusively with this group of people. As Jay says, “Lane Bryant never deviated from the plus-size category. we invented it….For over a hundred years we’ve done only one thing and that’s plus-size apparel for the American woman.”
But that didn’t mean that Lane Bryant was ready for the development of this ambitious social network project. Their focus and culture, like most apparel retailers, had been sales and product focused. It wasn’t easy to go from a “plus-size retailer who sold women’s apparel” to a “fashion-retailer who sells plus-size.” While that might sound like marketing, its actually a culture change that takes the social customer’s emotional experiences with not just Lane Bryant but why they buy clothes and want to feel good about how they dress and what they buy. That culture change took well over a year to evolve, but it did and Inside Curve was born.
Inside Curve
So what does Inside Curve provide to plus-size women that makes it something Social CRMers like us can be glad to see?
First, take a look at this image of the site: So you can think about it and feel it a little at the same time.
Inside Curve is focused on customer engagement. While Lane Bryant does advertise some of their wares, which is something which will test as good or bad over time, they also involve the customers in finding out what they think and how they think. Customer driven product reviews, design tips and style advice in the Buzz section not just from the experts but also from the customers themselves, discussions on fashion trends, behind-the-scenes exclusive stuff, and even promotions and savings for members of the network are part of the experience designed to reinforce the development of what Jay Dunn unashamedly calls “a sisterhood.” Blogs are an integral part of Inside Curve, too. Blogs, articles, etc. are written by Jay’s staff, with some forthcoming expert commentary from the Lane Bryant trend group and other fashion experts in the brand.
They aren’t ignoring the glam either - which, regardless of how you view the fashionista world and the catwalk, is something that zillions of “ordinary” humans pay attention to. They are involving the Lane Bryant models “behind the scenes” content that would show what goes on in a photo or video shoot; content from the TV show More to Love with clips that will be for the site and other glitz of interest to the members.
While Lane Bryant plays a major role in the blogging and the content exclusive site, they are playing much more hands off when it comes to forums and groups. Not only are they allowing them to grow organically in Inside Curve, but also are encouraging external growth too. They are fully aware that their customers are using social media to communicate. Consequently, Lane Bryant sees its role as providing brand content.
Jay again:
“We want to allow ‘inside’ access to the brand, thus the name. If ever there were a brand with whom its customers feel a “lovemark” connection, it’s this one.”
As of this morning, Inside Curve had 3642 members - prior to launch - an auspicious start.
Thoughts? Of Course!
A couple of things.
Notes to Lane Bryant
First, would I do anything different, add anything, or at least monitor some of the more touchy areas? Yes, of course. What would this be posting be without me being opinionated? Here are a couple of iniitial thoughts on that.
- I think that I’d minimize the advertising and clearly differentiate it from the brand content. Until the community is substantially large enough and has the confidence of its members, the advertising can be detrimental. I’d tread lightly.
- I think too that I would make a serious effort to encourage and support a blog or two from members of the community, not just experts.
Community Building Notes
There is one exceptionally important pioneering lesson in the Lane Bryant community that I want to make emphatic.
With the creation and launch of Inside Curve, Lane Bryant is institutionalizing an already existing community of people who have no organization and loose ties. The plus size women are as he called them “a community by exclusion” that grew organically - almost protectively. They’ve had a presence but no organization. Now they do have that presence under the umbrella of a trusted brand.
There are many groups like this out there that have grown organically and are loosely tied. You can point to the PC gamers community for example. If I were a business, I’d take the Lane Bryant lesson and find those that are there, identify who the influencers are and engage the influencers - who are the glue of the loosely tied - in helping me build my institution so that these loosely tied, organically created groups are supported by your brand. There is mutual value to be derived in that - more on that in an article I’m preparing for SearchCRM today.
What Lane Bryant has done is important - for plus size women and for Social CRM community practices. For the plus size women - they have a place to go to converse and benefit and in return, Lane Bryant benefits too. For Social CRM community practices - providing a model that recognizes that the community doesn’t have to always be built - it can be captured.
That works too.
July 15th, 2009
Coca-Cola Teaches The World To....
“Participating in the community of the consumer.”
I love that phrase. That’s the way Jim Keyes, Blockbuster CEO described their Facebook group - which is for the most part, despite all our conversations to the contrary, is what most people think of when you say “community” or “social network” now. As I’m sure you can guess, there are hundreds, perhaps thousands of businesses who are using the most popular social networks to create groups, or pages, or fan sites to develop an external - beyond their own firewall community. They are going to where the customer lives, but not necessarily where they shop. Ecommerce is not Facebook’s strong suit.
But these fan pages on Facebook are nothing more than a segment of a strategy for customer engagement when a company does it right though there are incredible Facebook groups that function as powerful engagement engines for some companies.
For the sake of developing the evolving Social CRM models, I’m going to discuss and deconstruct some of the pieces of the Coca-Cola social CRM strategy - though I doubt they call it that. This won’t be complete. Its just to indicate two things that they’ve done that are just right and how they’ve utilized existing resources in combination with the new ones to do that.
BTW, I’m hoping assuming that I’m going to get a geographical uptick in page views from Atlanta. :-)
Coca-Cola Loves Its Fans
On the simplest level, In creating a Facebook group for your organization, you’re banking on a number of things:
- That your customers actually use Facebook.
- That they can be informed via the Facebook tools provided of the existence of your group - in addition to your own normal communications channels
- That they will find what you are providing to be enough interest to make your community a regular stop when they are logged in to Facebook.
- That the customers will opt in to being updated about the continuing activities of your community.
- That they have no objection to Facebook owning the knowledge of their activities in your group as an asset and as part of their Facebook “customer record” also known as their profile.
The benefits of these external community pages can be well worth it if you are willing to accept that you don’t control the source - in this case, Facebook. Marketing and loyalty are one of the areas that profit from this kind of external community. Customer service can be served by these kinds of communities though Facebook pages are not necessarily the best vehicle for that. There are sites like GetSatisfaction that provide external customer service communities created by either the customer or employees of the company, that serve this function. Additionally, companies like TiVo have seen the value in Facebook as a supplementary site for garnering and capturing customer service issues and data.
But Coca Cola, oh, baby, oh baby, oh baby. Check it out.
Things Go Better with Facebook - Coca-Cola’s Fan Club
Coca-Cola established their Facebook “fan page” in September 2008 and from then to June 2009 recruited 3.4 million fans. (As of today, it had 3,497,642). Actually, this isn’t entirely accurate. What they did was find a page that had been created by a couple of 29 year old Coca-Cola fans and, rather than sue them which is what one of the youngsters feared, instead worked with the two fans to build the page up. But this wasn’t a case of buying the page. The creators became an intimate part of the continued development of the page. Coca-Cola had a savvy understanding of the benefits and the limitations of a Facebook group. They understood that Facebook was a site that their customers used, not one that the company owned. Coke wanted to be unobtrusive and leave it a “fan club.” While I’d say that they aren’t unobtrusive any longer, they have been entirely successful because of their understanding of how Facebook works and their intelligence when it comes to collaborating with their fans.
While the founding fans still use the pages, Coca-Cola has a wide range of interactions on the page. They use it for promotions. They track the conversations of their customers through the postings to the Facebook wall and to the discussion groups. They give fans “exclusive sneak peeks” at things like the Coca-Cola iPhone Facebook app which makes those fans feel like they are on the inside of something.
When it comes to the visual arts, they don’t just have generic or random photo uploads. They wield photos like artists use brushes. One album will be an archive of historic Coke photos evoking nostalgia. Another will be a birthday album of Coca-Cola employees celebrating a birthday - Coca-Cola’s - but as informal shots at a beach. They also allow fans to upload their own Coke related photos to the site.
Think of what kind of brand image is projected in just the way the photo archives are used. “We are a company with an immensely proud tradition that not only can stay up with the contemporary but are also personable and intimate with you, our customers. We want you to know us and we want to know you.”
The brilliance of the fan page doesn’t stop with photos. If you look at the Wall updates, they are in Italian, French, English, Spanish; two or three languages I can’t figure out and even when in English, reference Coke in Macedonia, Thailand, Romania, and France. “I’d like to teach the world to sing, in perfect harmony….” (I know you know that one).
What the brand leaders at Coca-Cola, particularly the Director of Worldwide Interactive Marketing Michael Donnelly, realized is that if you let the fans control their own conversation and support it, you can build something substantial and engender advocacy in ways that weren’t even a glimmer several years ago. What that translates to is 3.4 million fans, the second largest fan “club” on Facebook, second only to President Obama with over 5 million (by June 2009). According to PageData, Coca-Cola recruits between 0 and 3500 per day with the median numbers somewhere in the 1500 range. That’s per day.
It would be nice enough to see this fan page which actually lets the members guide it, though with input from Coca-Cola, if that were all there were to how Coke views the social customer. But they have a much more comprehensive engagement strategy. They understand that the customer doesn’t just want engagement. They want personal engagement. Hence the brilliantly conceived and so far so good executed Coca-Cola Free Style - their new vending machine. fountain dispenser Yeah, vending machine fountain dispenser. (Update: Thanks for the correction goes to Ray Crockett, Director, Communications, Coca-Cola, NA)
Coca-Cola Freestyle
If nothing else, Coca-Cola is innovative - and the aptly named Freestyle gives you a hint of that.
Freestyle is Coke’s new vending machine fountain dispenser. Its not innovative because it takes your quarters a.k.a. dollars to get soda (or as those from the Midwest keep trying to call it “pop”) or “healthy” drinks from it. It’s innovative because it actually allows you to customize your drinks - with up to 100 combinations including, for example, if you really, really want it, raspberry orange Diet Sprite.
First things first. Here’s how it looks - very cool - though a bit too much like a contemporary Maytag washing machine -but an undeniably trendy one.
But what it does has nothing to do with cleaning clothes. This thing is remarkable for three reasons.
First, it gives the customer the choice of over 100 selections of drink combinations customized (modularly) that include soda, diet soda, sparkling water, tea, health drinks etc. - several of which have never been sold in the U.S.
Second - it is tied into an IT backbone that allows it to wirelessly send information to an SAP system that not only tracks the personalized drink preferences of the customers using the machine but also manages the inventory - “oh, Freestyle is almost out of Coke Zero, needs refill.” All of this data is tied back to the SAP supply chain and CRM systems in the back.
Third - it is an incredibly innovative use of RFID and one of the first that really indicates how valuable RFID can be.
For some discussion on this, I got Mickey Brazeal, Assistant Professor of Marketing at Roosevelt University and author of the 2009 book, RFID: Improving the Customer Experience, to opine on how RFID and Freestyle work together:
“It’s easy to add wireless communication and data processing to a vending machine. Such a machine could respond intelligently to individual customers and to changing situations.
“It could know what it’s running out of and arrange to be replenished efficiently, the way an RFID smart-shelf can. Tags on individual products or ingredients talk to a reader that orders replacements as necessary. The replenisher doesn’t have to carry in everything - only the stuff that needs replacement. And the system isn’t perpetually running out of the most popular items. People who use vending machines are very often in a situation where there is no alternative, and an out-of-stock is a bad customer experience - much worse than in a store where you can usually just choose a different brand.
“It could figure out which combination of products generates the fastest sales or the largest profits in a particular location. It could offer products (drinks) in different sizes and create the package mechanically immediately after its button is pushed. It could offer different products in the morning than it does in the afternoon. It could authenticate the items loaded into it, and make sure that no counterfeit or unauthorized product is sold. This is a level of control over remote vending machine servicers that marketers have not always been able to assert in the past,
“It could accept payment cards and, through the payment card, offer loyalty points that are recorded automatically, and that generate an occasional free vend. It could use a group of ingredients to customize the product for each individual customer. Why should a machine offer six flavors instead of sixty, or six hundred? It could recognize a customer by his payment card, and serve up “my usual”, like a neighborhood bartender.
“The Coca-Cola initiative is a big first step. It will use ingredient cartridges to create, on the spot, the beverage ordered by the customer. Because it doesn’t have to contain the finished product, it can offer a huge range of flavors - about 100 in this case. It will authenticate the ingredient cartridges and prevent the use of counterfeits or competitors. It will track inventory and summon the service person with specifics about what is needed. It will shine a light on the item that is to be replaced so that no mistakes are made. The customer uses a touch screen to select the right item.
“When you can choose from a hundred flavors, it’s hard to see the process as mass marketing. It starts to be less about the product brand (Diet Coke vs. Coke Zero), and more about the retailer brand (all these flavored waters from the Coca-Cola company.)
“It might create more use-occasions: breakfast-at-your-desk beverages, bubbly waters with lunch, a Coke at the afternoon break. People who are stuck with a “vending room” in a remote location start to see it as less of a sacrifice. Suddenly it’s not so much the low end of the foodchain. Maybe it replaces some of the pilgrimages to Starbucks.
“Right now, if you hate the stuff in the vending machines, tough luck. In this new world, the vending machine will try very hard to find out what you like, and when and where you want it, and make certain it never runs out.
“Down the road, there are potential environmental advantages as well. If such a machine could be attached to a local water source, then the fuel-guzzling business of trucking around products that are mostly water would be unnecessary.
“Vending machine soft drinks from Coca-Cola have a loyalty program where the purchaser can find the number inside the cap, go to a website, record the number, and collect a micro-microcredit toward premiums. But it’s an awful lot of work to earn one two-hundredth of a baseball cap, and therefore has limited participation. A payment card could make the points process automatic.
“The next step is a store-sized vending machine - an entire convenience store without employees. If you only have to restock the items that have sold out, you can do it with a single daily replenishment trip. Services will be sold automatically as well. Imagine an unattended car wash. The door opens in response to an RFID tag on the customer’s windshield. Soap and water are dispensed automatically. Brushes and buffers whirl as the car reaches the right spot. And the tag on the windshield picks up the check. Frequent users get big discounts. Almost all the car wash business is frequent users. And it’s sold as a relationship. Transaction customers can’t even get in.”
….Customers Go Better With Coke
Okay, so think about this. Coca-Cola is working with a strategy that has as parts of it, social networking use and the use of technology tied tightly into CRM and SCM. They tie these pieces into a matrix that interweaves with their loyalty/advocacy programs (I’ll talk about those in a future post). But what frames all of these seemingly disparate pieces is their interest in providing an optimal and personalized customer experience - in whatever venue the customer is. So the customer can socialize with other customers around the coolness of Coke or the nostalgia around Coke on the Facebook page. Then they can go take a break (at least in Atlanta, Coca-Cola HQ where Free Style is being tested) and go to Free Style touchscreen, punch in their customized quaff and then return to Facebook to talk about the coolness of Free Style. Wow.
What are two apparently disparate parts are actually tied together by Coca-Cola’s corporate commitment to its customers to making them advocates, not merely committed Coke gurglers. The experience is built around “fan” engagement in all facets - Facebook to Free Style. Smart move, from a very smart company.
July 6th, 2009
Time to Put A Stake in The Ground on Social CRM
The debate and discussion about what defines Social CRM a.k.a. CRM 2.0 vs. its traditional parent has been going on for about 2 years pretty regularly and started, according to thought leader Graham Hill almost a decade before that.
Personally, I’m done defining it and am moving on. I think enough time has been spent trying to decide what we’re calling it and what it is. I think that we’ve reached the point that though there is no one point of view, there is a general idea of what we have. So this post, which will be on ZDNET and PGreenblog is my stake in the ground for the definition of Social CRM. If anyone asks me what the definition is, they are going to be referred to this post on either blog. I’m putting it on both blogs, but it has implications for each blog that are somewhat different. Check toward the end of the post where I’ll discuss how I’m going to approach each one.
Also, for this post, I still will welcome comments and discussion on the definition if you want. But I’m really ready personally to move on.
Why?
First, there seems to be a consensus on the definition already. We all agree on its general characteristics. We see it as the use of social and traditional CRM tools and processes to support a strategy of customer engagement. Or some permutation of that.
Second, there’s too much other work on Social CRM to do. Its time to start figuring out and documenting the business models, policies, practices, processes, social characteristics, applications, and the methodologies that we need to actually carry it out. There is some great work going on in those Social CRM areas already with folks like Graham Hill, Denis Pombriant, Thomas Vander Wal, Brent Leary, Prem Kumar, Chris Carfi, Bill Band, Natalie Petouhoff, Mike Fauscette, Michael Maoz and Ray Wang, among others (please forgive me if I didn’t mention you. There are many others). But we need to create a repository for all this work - and an institution that can represent it agnostically. Right now, the body of practice out there is all over the place. Even with this, the work on Social CRM’s “how” needs a dramatic escalation now.
So, I’m providing one last aggregate look at what I see Social CRM to be. When the 4th edition of CRM at the Speed of Light comes out, you’ll see a lot of the what and how in that nearly 800 pages. This is the condensed - black hole condensed - version of that.
I hope that I’m reflecting the consensus. If not, I’m sure the discussion will go on. But as far as I go, I’m interested in the more substantive discussions on what we actually have to do - not how it differs from traditional CRM nor what we’re talking about when it comes to “social” and whether or not we are going to call it CRM 2.0 or social CRM.
My Take On It
Okay, here’s my take on Social CRM’s definition.
- I’m conceding to “Social CRM” as the term of choice, rather than CRM 2.0. If ZDNET will let me, I’ll change the name of the blog to “Social CRM: The Conversation” CRM 2.0 has been a placeholder at best and obscuring at worst - it doesn’t reflect the customer’s control of the business ecosystem all that well. Social CRM is a better, though not great, reflection of what we’re talking about. Let’s use the acronym of the Twitterverse group for it - SCRM or sCRM. I don’t care which.
- The customer controls the business ecosystem and the conversation, but not the business a.k.a. company a.k.a. enterprise itself. What that means is that while customers have much greater control over their destinies in how they interact with businesses, make no mistake about it, they don’t run the business, nor does the business have to concede everything to the customer.
- What this means is that SCRM is an extension of CRM, not a replacement for CRM. Its a dramatic change in what it adds to the features, functions and characteristics of CRM but it is still based on the time honored principle that a business needs its customers and prefers them profitable and that same business needs to run itself effectively too.
- The transformation that’s sparked the need for Social CRM seems to have occurred in 2004. It has been a social revolution in how we communicate, not a revolution in how we do business per se. All institutions that humans interact with have been affected by things like the cellphone/smartphone, the new social web tools and the instant availability of information in an aggregated and organized way that provides intelligence to the person on the street, not just the enterprise.
- Part of that transformation affects how we trust and thus who we trust. Since 2004, “someone like me” is the most trusted source, not businesses, NGOs, government agencies or corporate leaders. That means that peer trust is how influence and impact germinates and then propagates most effectively - at least as of now.
- The lesson for business, in terms of Social CRM is that we are now at a point that the customers’ expectations are so great and their demands so empowered that our SCRM business strategy needs to be built around collaboration and customer engagement, not traditional operational customer management.
- We’ve moved from the transaction to the interaction with customers, though we haven’t eliminated the transaction - or the data associated with it.
- Businesses still need to run their operations, set goals that are cognizant of what the customer wants and needs, but not determined by that. They need to map their goals and objectives to the customers’ goals and objectives to make it work for all concerned.
- That means that we need to recognize that there is an extended enterprise value chain which consists of the company, its suppliers, vendors and agencies that the enterprise has to deal with. There is a separate “personal value chain” which is the total greater than the sum of its parts of what an individual customer needs to achieve whatever their personal agenda is.
- For the company to succeed, since they cannot control the personal value chain of the customer, nor should they want to, they can only provide what the customer needs to satisfy that part of the customer’s personal agenda that is associated with their enterprise. That means products, services, tools and experiences that allow the customer that satisfying interaction.
- The intersection of the extended enterprise value chain and the customer’s use of part of his personal value chain to satisfy that personal agenda creates the possibility for a collaborative value chain that engages the customer in the activities of the business sufficiently to provide each (the company and the customer) with what they need from the other to derive individual and mutually beneficial value.
- That means that transparency and authenticity become more than buzzwords because in order for the customer to make intelligent decisions on how they are going to interact with the company and the level of that interaction, they need that visibility and honesty from the company.
- That also means that the companies need to make the decision that its a good thing to allow the customer to have that increased level of knowledge, access and honesty - it can help the company immensely in their engagements with their customers. That’s a cultural issue that has to be resolved for Social CRM to work.
- If these aforementioned conditions are met, the customer is afforded the ability to co-create by the company. What that means is not all that pat. It can mean anything from customers and the company collaborating on product development, to customer suggestions on how to improve a company process, to customers helping other customers solve customer service issues, to even doing what gamers do and modifying game play using tools for scenario creation which adds value to the game. Co-creation is the ability of the company and customer to create additional value for each other - what form it takes is not always THE BIG THING. But co-creation, mutually derived value, is at the core of SCRM.
- SCRM differs from Enterprise 2.0 though is integrally related to it. Enterprise 2.0 is organized around increasing the productivity of the workforce in all that it does utilizing new collaborative tools to do so. It uses those tools to aggregate and organize information and systems. However, though different, Enterprise 2.0 is integrally related because part of that improvement in productivity increases the effectiveness of employee-customer interactions. It also increases the company’s ability to capture useful information and knowledge about customers, not just boatloads of data. But what it doesn’t do is provide avenues for the customers to engage themselves with the company. That’s not its purpose. That is the purpose of SCRM.
- SCRM also changes the nature of what kind of customer is optimal for you. Rather than aiming at a satisfied customer (an increasingly useless metric) and even rather than thinking that a loyal customer is your best customer, your objective should be to create advocates and settle for loyal customers.
- How you measure customer value changes when you’re thinking about SCRM. Rather than just Customer Lifetime Value (CLV) - which reflects the direct financial value of a customer to a company over the life of his relationship to that company, think too about Customer Referral Value (CRV) which measures how valuable influential customers are when they tell others about your company, not just promise to.
- When you look at the SCRM applications out there - there are no actual SCRM suites, no matter what the claims of any company on either the CRM or social tools side. What you do have are effective and important applications that increase the ability of employees to interact with customers - though they are not tools that facilitate the actual interaction. You also have the integration of social media and community building tools with traditional CRM tools which are providing effective combinations which are leading toward SCRM. I want to emphasize. These are all good tools. They are worthy of any company’s consideration. There is just no SCRM suite out there - as of yet or in the near future. Which doesn’t matter one iota.
I’d say that covers the basics.
A Shorter Definition
For a shorter definition of SCRM, I’d say:
“CRM is a philosophy & a business strategy, supported by a technology platform, business rules, workflow, processes & social characteristics, designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted & transparent business environment. It’s the company’s response to the customer’s ownership of the conversation.”
Well, it may not be tweetable but it’s shorter.
A Tweetable Definition
“The company’s response to the customer’s control of the conversation.”
With the quotes and the period, its 71 characters. Get rid of the period and you can just write it twice.
What’s Next?
Let me reiterate something. This is my stake in the ground. It would be presumptuous of me to assume I can halt a discussion that I no longer want to participate in. That said, in presentations etc. I’m going to continue to give the definition of SCRM because people will be asking. But I’m not going to try to define it anymore. I know what it is. I think that most people who read my stuff know it too - and many who don’t, also know it. I also am no longer going to engage in discussions or defenses of whether or not it’s “necessary” or “marketing hype” or any of that. Again, stake in the ground. While there is plenty of room for traditional CRM strategies, the change in the customer necessitates some sort of commitment to social CRM to succeed with that neo-customer.
So, here’s what I’m going to be doing and not doing from here on.
- No more debates on what Social CRM is, though I certainly will discuss what it is in presentations and when else it makes sense. But I’m not trying to define it any more
- No more detailed defenses on whether or not its necessary. Its existence is always necessary. Its use is necessary in appropriate situations.
- No more calling it CRM 2.0 for me. Its Social CRM.
- In all the venues I have when it comes to discussing Social CRM, it will be the new business models, the processes, the methodologies, the practices, reviews of the applications that are part of the SCRM universe - and debunking the claims of those apps if need be. I’ll be providing as many success and failure stories as I humanly can so we can develop a body of practice.
- For ZDNET, now that the book is done, I’m going to focus on what the ZDNET audience loves the best - the technology and processes of Social CRM - related or otherwise. Plus the practitioner stories of successful implementation. There will be deviations from that but that’s my ZDNET primary direction. Plus I’m going to try to change the blog name, if it doesn’t wreak too much havoc to Social CRM: The Conversation
- For PGreenblog, the focus will be on the discussions ranging from the business models, the social psychology, the economics to the theoretical concepts and the practical strategies. I’ll look at the culture of the companies, the nature of the customer’s thinking, the effect of style on all of this, etc. I’ll do the best I can with what the line of business person needs to know and what the academician needs to explore.
- I’m going to spend some time trying to create an institution to capture all of this called the Institute for the Future of Business and the Customer (IFBC) which will include the actual B2B and B2C and B2G customer on its leadership body with the company leaders. Unlike any other institution of its kind that I know of. This is not an easy task. I’ve been trying for two years to do this already and have made some progress but it needs a good academic institution and an endowed chair and a couple of companies to underwrite it. It is an agnostic body that will attempt to aggregate and organize all this incredible knowledge on how companies and customers engage and establish what the new business world looks like going forth. Ambitious, even grandiose? Maybe. But I’m going to try or go down in flames trying.
That’s it. Stake is in the ground. Comments on the definition per se are welcome this one last time on either of the blogs that you see this.
But I’m done. AND I’m just starting.
In addition to being the author of the best-selling "CRM at the Speed of Light: Essential Customer Strategies for the 21st Century," Paul Greenberg is President of The 56 Group, LLC, a customer strategy consulting firm, focused on cutting edge CRM strategic services and a founding partner of the CRM training company, BPT Partners, LLC. See his full profile and disclosure of his industry affiliations.
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