What's New in Marketing - Issue 39, June 2005

http://www.wnim.com

Why do some CEO`s Fail?

Over the last 30 years I have begun to recognise some patterns of why some CEO`s fail.

First, there is a positive side to failure - successful people almost have to fail more frequently than others because they are making more attempts. Few of us were sent off to school by mothers who said, “Take risks!” yet successful CEO`s have to learn to do this, decisively. With this “systems view” of failure, successful CEO`s take losses in there stride, even if that stride includes an occasional kick at the cat. So - one answer to “why do some CEO`s fail” is “Because they understand that calculated risks are necessary to succeed, and such ventures will involve failure.” Most of these CEO`s recognise the status quo is not an option, and by “playing it safe” the organisation may actually be put at peril. But, most CEO`s have a golden parachute package of payment that makes them take more risks because, their pocket is safe!

Failures teach successful CEO`s, and over time the following lessons seem to account for most of the learning:

1. An inability to see the bigger picture. If you’re being eaten by a lion, it’s tough to see the lion. Some pressures are industry-wide, even global, and the successful CEO may have to divest a core business to succeed. This is difficult, and it is why so many successful CEO`s surround themselves with good `peers` and `mentors`.
2. An aversion to using solid financial practices. A CEO I know once shared with me over dinner that he did not pay enough attention to financials before he saw his publicly traded company forced into bankruptcy. The reason, he said, was that the numbers would simply “swim together,” overwhelming his discomfort with financial indicators. Although it’s not hard to remedy - I have seen hundreds of CEO`s do it - a CEO first has to admit there’s a compelling need to learn how to avoid going broke.
3. A lack of clear vision. Successful CEO`s lead the organisation to where it needs to be, and find ways to get buy-in at all levels. This is hard - otherwise, all organisations would do it well. Done right, clear vision can substitute for the field manual, empowering everyone to make crisp decisions in the company’s interest.
4. Lack of passion. Most organisations no longer need arms and legs (command and control); instead, they need hearts and minds (sell and enrol). People need to be led more than they need to be managed. Provided things are going well, a lack of passion is usually burnout, which comes from solving the same issue over and over. When things aren’t going well, avoidance may look the same as ‘lack of passion,’ but it’s not - CEO`s may talk about packing it in when instead they really need to face the difficult task at hand. Some years ago Fortune magazine polled 500 of its more successful readers and learned their strategies for success: (1) know thyself (2) seize opportunity, and (3) pursue meaning. When I encounter a lack of passion in an otherwise successful CEO, I gently suggest a process to revisit personal core beliefs. The fundamental questions of Who am I? Why am I here? beg to be answered, and if urgent tasks continually pull me away from considering these important questions, burnout and depression may be the result. Passion matters, greatly. Passion of CEO`s passes through to all employees who generate more profit.
5. Lack of clarity on the reasons for success. Great CEO`s hold their associates accountable and responsible for knowing what activities cause results. CEO`s focus on what to do, and let associates take care of the “how.” Then, on a regular basis, associates monitor the activities that lead to success. For a sales manager this might mean counting and publicly posting the number of cold calls and referrals every week, in addition to the actual sales results. The difference between champions and good performers is not terribly great sometimes, but champions win consistently because they understand what causes a win. Finally, successful CEO`s foster (and insist on) the use of reliable, continuously improving, and innovative methods for getting work done before they let their associates take care of the “how.”
6. Distractions such as acquisitions, golf, and other anxiety management techniques. Successful CEO`s pay attention to the central task, which is putting the organisation in touch with reality and leading.
7. Disconnecting from customers. Some of my most successful CEO clients are on the road over half the time, talking to customers.
8. Disconnecting from employees. The best leaders find ways to keep in touch with their employees, not only because they are genuinely interested in their lives, but also because they realise there is profound knowledge in the ranks. Passionate CEO`s have passionate employees to drive profit up.
9. Integrity outages. I’ve heard many MBA candidates complain about leadership that says one thing and does another. I do not have hard data on this, but I suspect that associates will tolerate no more than about three inconsistencies before they start to tune out.

My CEO clients work hard, teaching me every day what it means to be decisive and fully engaged in life. I am certain of only two things: Confusion is a precondition to learning, and a loss of company success. Excellent CEO`s listen and learn every day and have an excellent team around them for success. People make profit!

About the author

Colin is a former successful Managing Director of Print Manufacturing Plants, Print Management/Workflow Solutions companies, former Group Chairman of the Academy for Chief Executives and Non-Executive Director, helping companies raise their `bottom-line` and `increase cashflow`. Author of several publications, research reports, business models on CD-ROM's/Software and over 400 articles published on business subjects worldwide. Plus, International Speaker and Visiting University Professor.

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E-marketing Insights: Integrating online and offline communications

Despite the range of opportunities for using these new online communications tools, traditional communications using offline media such as TV, print and direct mail remain the dominant form of investment in marketing communications. Even organisations which transact a large proportion of their business online continue to invest heavily in offline communications. Consider the travel sector where both travel suppliers such as BA, Thomson and EasyJet and intermediaries such as Expedia and Opodo transact an increasing proportion of their sales online, but are still reliant on offline communications to drive visitors to the web to transact.

In other sectors, or where the travel product is high value and high complexity, it is important to support customer enquiries where they may want to place the order by phone because of security fears they simply need personal advice and discussion about the product. From a website perspective, communications integration involves integration both of inbound communications and outbound communications.

First we review some of the merits and disadvantages of using offline communications to encourage online channel usage. After that we look at how the usage of offline communications can be controlled to best track results and deliver performance. Finally, we briefly consider specific issues with the different tools.

Benefits of using offline communications to support E-commerce

Offline communications work, in achieving outcomes both in the

•           Real world (store visits, sales phone calls, mail-order requests) and the

•           Virtual world (typically at least 50% of visitors to a website are marked as ‘no referrer’ – they type the URL because they are already aware of it, or they are untracked). Even many search engine users simply type the name of a brand.

Offline communications are most effective in achieving four critical things:

•           Reach

•           Brand awareness

•           Emotional connection with brand

•           Explanation of the online value proposition for a brand.

A further benefit is that for any given objective, integrated marketing communications received through different media are more effective in achieving that objective. This cumulative reinforcement effect of integrated marketing communications has been summarised well by Pickton and Broderick (2000) as the 4 Cs of:

·         Coherence – different communications are logically connected

·         Consistency – multiple messages support and reinforce, and are not contradictory

·         Continuity – communications are connected and consistent through time

·         Complementary – synergistic, or the sum of the parts is greater than the whole!

Disadvantages of using offline communications to encourage online channel usage

But the typical disadvantages of offline communications compared to many online communications tools are obvious. In general the disadvantages of offline communications are:

·         Higher cost: Return on investment tends to be higher for online communications such as Search Engine Optimisation, Pay Per Click marketing or Affiliate marketing

·         Higher wastage: The well known expression about ‘half my advertising is wasted, but I don’t know which half’ may be true about offline marketing, but it is not true online if the right tracking processes are in place

·         Poorer targeting: Targeting by behaviour, location, time, search keyword, site and site content is readily possible online. This tends to be more targeted compared to most offline media (apart from direct marketing)

·         Poorer accountability: It is straightforward online, to track response, offline is expensive and error prone

·         Less detailed information: The detailed information to support a decision can only be cost-effectively delivered online

·         Less personalised: Although direct mail can be personalised, personalisation is more straightforward online

·         Less interactive experience: Most offline communications are one-way – interaction is possible online.

Defining response mechanisms

Experienced digital marketers make best use of the full range of response mechanisms to give choice or maximise response from their communications – they direct customers to use response mechanics that will give the best quality responses or leads. Not all responses are equal – so give the emphasis to those that maximise response and/or sales.

The figure below suggests the typical option of outcomes to E-marketing campaign media. From the creative such as a display ad, Pay Per Click ad or rented e-mail newsletter, there are four main options:

Figure 1 Range of response mechanisms from online media

(a) Home page

In the majority of cases, your return on investment in online media will be reduced if you simply drive visitors to the home page of the web site. Typically, it is appealing to many audiences and offering too much choice – it won’t effectively reinforce the message of the online creative or convert to further action.

Often, though, this approach is used since insufficient emphasis in the campaign is based on online media and creative and insufficient on achieving response.

This approach is only really warranted when the main objective of a campaign is awareness-building and even then a focused landing page will usually better achieve this objective.

(b) Microsite / landing page

A focused landing page or specially created microsite can more effectively convert your visitors to the action you need to gain a return on the online campaign investment.

A microsite often uses a campaign specific URL sometimes known as a CURL.

A concern with the microsite approach is that it may not showcase other products and services and can result in a poor user experience if they are looking for other information. A further problem is expense of creating and maintaining microsite pages. Some organisations mandate that visitors should be directed to landing pages which are part of the main site structure. There is no single best answer to this. Indeed a compromise may be best where specific microsites or optimised campaign pages are used for pages which receive the most impressions. For example pages which receive a large volume of visitors from PPC or SEO search marketing.

(c) Personal: (chat or call-back)

In this case the creative or the landing page encourage campaign respondents to ‘talk’ directly with a human operator. Buttons or hyperlinks encourage a callback from a telephone operator or an online chat. The advantage of this approach is that it engages the customer more and will typically lead to a higher conversion to sale since the customer’s questions and objections are more likely to be answered and the personal engagement, possibly including a phone follow-up is more likely to encourage a favourable impression.

(d) Offline: Phone or store

Because part of a campaign is run online does not mean that offline responses should be excluded. Offline response mechanisms should not be discarded unless the cost of managing them cannot be justified, which is rarely the case.

There are two very good reasons for this. First, all customers are different, some may prefer to respond or enquire further offline by phone, or purchase in store – these customers should not be excluded – they may be in the majority.

Secondly, customers who subsequently respond offline may be more likely to purchase – they are less likely to evaluate competitors offline than they are online where this is more readily possible.

A good illustration of this point is an acquisition or retention e-mail campaign: this should generally not limit responses to online, but provide phone numbers for those customers who have queries – we need to accommodate both online and offline response.

E-mail replies

Another possible option, specific to e-mail campaigns should also be considered. For acquisition and retention e-mails, reply to the e-mail is another response mechanism that should be tracked, although some marketers deliberately don’t monitor these addresses due to the volume of bounces and give a message to this effect, however, valuable feedback and sales leads can be contained within these replies and can be identified if you are using e-mail ‘bounce management software’.

Offline media response mechanisms

Let’s now look at the ‘offline side of the same coin’ which has much in common with online response mechanisms.

Web response

When offline media drive responses to the web, this is a special form of direct response, often called the web response or “drive to web” model. The website is used as the direct response mechanism where the customers express their interest in the offer, hence 'web response'. An offline campaign element which prompts respondents to respond online.

The figure below suggests the options for response mechanism from an offline media element. Let’s briefly review them – we have looked at each for the online media previously.

Figure 2 Range of response mechanisms from offline media

(a) Home page

This is commonly used for offline campaigns.

The benefit of this approach is that this is usually simplest and most memorable, but it will not usually give campaign-specific information unless space is reserved for this messaging, which is unusual.

For international companies, individual companies should be referenced where possible to a more readily connected audience with relevant information, e.g. www.3m.com/uk

(b) Microsite or landing page within site

This is an individual page on the web site, for example, www.company.com/products/insurance/car-insurance – this is not common practice since it is difficult to remember and type in, but it can work in direct mail and print campaigns if kept simple. Instead www.company.com/car-insurance may be better. So shorter page URLs can be used as shown above to reduce the typing needed. A URL strategy should be used to help visitors reading offfline communications to find specific information they know from a page deep in the site rather than their going straight to the home page.

They are also useful for measuring the response of offline media campaigns since we can measure the number of visitors arriving directly at the URL by entering the domain name.

(c) Microsite / Campaign URLs (CURLs)

This approach is commonly used, today, even warranting a whole article in Revolution on this topic. To give an example – for example, an insurer used the ‘CURL’ http://www.quotemehappy.com/, a mortgage provider, http://www.hateyourmortgage.com/ and a phone company http://www.sleeptomorrow.com/ which are memorable elements of the campaign. These certainly stick in the mind more than the standard company directory.

Personalised campaign landing pages

Web response can be taken further by developing different offers for different segments. For example, a Netherlands-based bank devised a campaign targetting six different segments based on age and income.

The initial direct mail piece contained a PIN (personal identification number) which had to be typed in when the customer visited the site. The PIN had the dual benefit that it could be used to track responses to the campaign, while at the same time, personalising the message to the consumer. When the PIN was typed in, a 'personal page' was delivered for the customer with an offer that was appropriate to their particular circumstances.

(d) Offline media

This is usually what comes before the online call-to-action in the creative for many offline campaigns, but it depends on audience and offer.

For example, for a company offering loans or insurance, making the phone number more prominent and possibly excluding the online responses may be preferable since conversion rates are often higher than for online responses where customers may just check competitor offers while they are checking yours.

This is something all companies must test for their audience and their offerings. But increasingly, you don’t want to exclude online responses, so the best compromise may be to emphasise offline responses where they will convert best, but to include online responses where possible.

Traditional advertising

Early attempts by many traditional clicks and mortar companies to advertise their online offering was limited to incidental advertising where the company’s web site address was added as a footnote to the advert with no attempt to explain the online proposition or drive a web response.

For both “online pureplays” and “bricks and clicks” companies, it is vital to use offline advertising to communicate their online value proposition in specific adverts and traditional companies are increasingly using this approach as more sales are achieved online.

Many organisations now run web response ad campaigns where one of the main objectives is to achieve web site visits. The web may be used to request a sample, enter a competition, find further information or if appropriate, buy online. Enlightened FMCG brands are now using offline advertising in conjunction with the web to get customers to interact with their brand, profile them and add value.

Specific promotion of the website and online channels includes the URL, but also emphasises the benefits the visitor will receive from trialing or making the switch to the online channel.

Deciding on the online / offline mix for advertising

This decision is typically taken by the media planner. But, depending on the agency used, they may play it safe by putting the ad spend into what they are familiar with and what may be most rewarding – offline media. Many cross-media Optimisation studies (XMOS) have shown that the optimal spend for low involvement products is surprisingly high at 10-15% of total spend. Although this is not a large amount, this compares to spend levels below 1% for many organisations.

XMOS research is designed to help marketers and their agencies answer the (rather involved) question "What is the optimal mix of advertising vehicles across different media, in terms of frequency, reach and budget allocation, for a given campaign to achieve its marketing goals?"

The mix between online and offline spend is varied to maximise campaign metrics such as reach, brand awareness and purchase intent. The table below summarises the optimal mix identified for four famous brands. For example, Dove found that increasing the level of interactive advertising to 15% would have resulted in an increase in overall branding metrics of 8%. The proportion of online is small, but remember that many companies are spending less than 1% of their ad budgets online, meaning that offline frequency is too high and they may not be reaching many consumers.

Table 1 Optimum media mix suggested by XMOS studies

Source: Interactive Advertising Bureau (www.iab.net/xmos)

The reasons for using and increasing the significance of online in the media mix are similar to those for using any media mix as described by Sissors and Baron (2002):

1. Extend reach (adding prospects not exposed by a single medium / other media)
2. Flatten frequency distribution (if audience viewing TV ads are exposed too many times, there is a law of diminishing returns and it may be better to reallocate that budget to other media)
3. To reach different kinds of audiences
4. To provide unique advantages in stressing different benefits based on the different characteristics of each medium
5. To allow different creative executions to be implemented
6. To add gross impressions if the other media is cost efficient
7. Reinforce message by using different creative stimuli

All of these factors, and the first three in particular provide the explanation of why XMOS shows it is worthwhile to put double digit percentages into online media.

Word-of-mouth

Word-of-mouth is a powerful technique of offline promotion. An urban myth is that if someone successfully buys a book online they will tell 10 other people, but if fulfilment is poor, they will tell 20 people! Offline communications techniques such as PR and advertising should be aimed at stimulating word-of-mouth and online viral techniques can also promote this.

PR

PR is a powerful and relatively low cost form of offline communications. There is good demand amongst the general and specialist media for stories about e-everything. PR can leverage events such as site launches and re-launches with new services, particularly when they are first in a sector. Press releases can be issued through normal channels, but using e-mail linked to the full story on the website to get information to the journalists faster. Options for getting mentions on the new online-only news sources should be explored. Some defensive, reactive PR may be necessary by scanning press releases on other company sites. The scope for PR stunts and viral marketing centred on microsites is limitless.

Direct mail and physical reminders

Physical reminders about website offers are important since most of our potential customers will spend more time in the real-world than the virtual world. What is in our customers hands and on their desk top will act as a prompt to visit your site and overcome the weakness of the web as a pull medium. Examples include brochures, Catalogues, Business card, Point of sale material, Trade shows, Direct mail sales promotions, Postcards (in magazines), Inserts (in magazines), Password reminders (for extranets).

Selecting the right timing and integration is important when using e-mail and direct together. Take the example of promoting a business-to-business event. If the first mention of the event is via a direct mail followed a week later by an e-mail this can be most effective. The direct mail is effective in creating awareness about the event and explaining some of the benefits, but the e-mail can provide (via the website) more details about the event and a response mechanism.

Alternatively, when mailing a large list, an initial e-mail and monitoring of response from this, can reduce the need and so cost for mailing some list members later.

It is also vital to select the best sequence and frequency of communications when direct mail and e-mail marketing are used together. This is a touch strategy or policy and we will explain this further in a future article.

Next month's article

There has been a lot of discussion over the past year about the “Long-tail phenomenon”, which is a modern application of Zipf’s “law”. Marketers can apply this concept to help inform their online marketing since it emphasises the importance of acknowledging a range of behaviours within a group of customers. As well as looking at the significance of Zipf’s law, we will also look at the relevance of other digital marketing laws.

References

Smith, P.R. and Chaffey, D. (2005) E-marketing Excellence: At the heart of E-business. Butterworth Heinemann. Elsevier. Oxford, UK. Second edition.

Pickton, A. and Broderick, D. (2000) Integrated Marketing Communications. Financial Times/Prentice Hall, Harlow.

Sissors, J., and Baron, R. (2002) Advertising media planning. McGraw Hill, Chicago. Sixth edition.

Further reading

Internet Advertising Bureau XMOS microsite (www.iab.net/xmos)

About the author

Dr Dave Chaffey is workshop leader for a range of one-day e-marketing training workshops from the CIM:

• E-mail Marketing (www.cim.co.uk/0766)
• Running Effective E-marketing Campaigns (www.cim.co.uk/0767)
• Improving Your Results from Digital Marketing (www.cim.co.uk/1138)
• Marketing Research Using the Internet (www.cim.co.uk/1135)

Go to http://www.cimtraining.com/ for course details and online booking.

Dave Chaffey is trainer and consultant for Marketing Insights Limited (http://www.marketing-insights.co.uk/) and E-marketing Director at Ripe (http://www.ripe.co.uk/). He is a prolific e-business author whose books include ‘Total E-mail Marketing’, ‘Internet marketing: Strategy, Implementation and Practice’ and E-business and E-commerce Management.

Read Dave Chaffey’s blog (http://www.davechaffey.com/) for E-marketing Essentials – the 5 “must-read” articles about online marketing from the hundreds Dave reads each month.

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Getting the best from your mailing house
(or how to make your mailing house love you)

Here are some ways to ensure that there are no last minute problems:

* Involve the mailing house at the planning stage – especially if you are contemplating using novelty mailers or unusual designs. If you are using personalisation, make sure the material specified is laser/ink jet compatible.

* Provide your mailing house with a dummy pack prior to mailing. Specify pack weight so that accurate postage can be estimated. Let your mailing house know the sequence of items in the mailing. Make a point of telling the mailing house about which items are different but which look similar.

* Give the mailing house enough time to schedule your job properly. If you can, give your printer a fixed delivery date – and build in a couple of day’s leeway. Late print deliveries play havoc with mailing house production schedules.

* Get address data delivered well before the mailing date so that it can be properly ‘health checked’.

* Make sure that your printer packs all print in manageable boxes and that each box has a sample of print on the front. Also that each box is clearly marked with the quantity and, if necessary, an identity code. The printer should also supply an accompanying delivery note with the quantity of pallets/boxes/quantities clearly stated. It is standard practice for mailing houses to sign delivery notes ‘unchecked’ because of the prohibitive time involved in checking all items of print. If you want your mailing house to weight check a random sample (or the whole quantity) ask them. Understand, however, that there may be cost implications for doing this.

* When ordering print for mailings, ask your printer to produce a small percentage of overs, especially on items like letterheadings. This allows for ‘spoilage’ in laser printing and also for file copies to be produced.

* Always try to sign off letters quickly to prevent delays in production.

* If you are supplying envelopes, check that they are machineable.

* On non-account postings, remember that postage will need to be prepaid before mailing.

* Also remember that unless otherwise agreed, insurance is the responsibility of the Client. If you have a mailing of unusual value tell your mailing house.

* Decide what you want to do with print overs before the mailing otherwise you may incur storage charges.

About the author

John Dyson founded mailing house Parade Mailing Ltd in 1977 and later became Executive Chairman of the Parade Group. He now heads the sales lead generating specialist Response Generation Ltd.

Further information from john.dyson@paradedirect.co.uk

Tel: 0870 066 4266

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Uncovering the latest target trend

Pssst.  Want something that earns respect and fear?  The mere utterance of its name has rung alarm bells in otherwise hushed rooms around Big Ben.

The terrifying, spine-chillingly horrendous …

hoody!

Where once nightclub bouncers turned away people wearing sneakers, now UK shopping centres like Bluewater close its doors to any child whose sports top incorporates a fiendish hood.

None of this has come as shock to me. As a child I was weaned on understanding the true terror of ‘the hood’.  After all, I watched Thunderbirds.

The nation is on hood-alert.  But where there’s a hood, there’s hope.  Mr Blair supports Bluewater. What’s more his deputy, John Prescott, also supports the initiative.  Recently it was reported that Mr Prescott experienced the shock of confronting a child in a hood first hand. John was in a café enjoying a nice cup of tea and piece of toast when suddenly, from beyond the hat stand, a group of hoodies appeared.  Luckily our lad kept his nerve and summoned his bodyguards to protect his last slice of toast.

Now that the nation’s officially ‘most wanted’ is no longer Al Qaeda but Alan and his crew from Wood Green, I wonder how the marketing community can help prevent the good consumers of our fair land from experiencing too many nightmares about sweatshirt tops with integrated hoods – some even featuring petrifying plastic bits at the end of each strand of string!

How about putting a premium price on sweatshirts that don’t have an integrated hood?  We could badge them with an official ‘Hoody free’ emblem.

Or we could get the boys and girls at outlets like Matalan, J-D Sports and Debenhams to run commercials for worried mums and dads:

Voice over (Female Scottish accent for that added warmth and sincerity).

Busy mums have so much on their minds these days.

Sound effects: Kitchen. Washing machine is on in the background.

Mum:

Tom started wearing odd things that worried me.  First it was a simple t-shirt with the slogan  “Dyslexics of the world untie.”  Matters worsened.  Later I pulled out one reading “Can I lick your forehead?”  (Holds back the tears). The other day…  whilst sorting out his whites… My heart sunk.   There, in the middle of the washing basket I felt something clammy.

It was warm, baggy and smelt like ready-salted crisps and kebabs.  I could feel the hairs rise on the back of my neck.  Every fear for my kids started hurtling towards me like a hoard of housewives waving packets of coupons for ten per cent off chicken roasters.

It was a sweatshirt.  But thank heavens, my son was clean – it was hoodyless.

Female voice over:

All our sweatshirts and tops have been stringently checked for hoodies.  So even if your teenagers have gone off their five portions of fruit a day, you can still be sure they are on the straight and narrow.

Male Voice Over:

Hoodies: Don’t keep it under your hat. Wear our reassurance on your sleeve.

Another way

Alternatively, marketers could use the ‘hoody’ device to ‘blaps-up’ a tired product.  For example, now that the hype over Anakin evolving into Darth Vader is all over, why not egenerate sales from the original movie.  Slap up posters outside schools showing how Princess Leia wasn’t as ‘vanilla’ as some thought.  No way. This ‘shorty’ was ‘the original bad girl in da hood’.

Why stop there?  Introduce the lucrative youth market to an even ‘heavier’ range of threads like street-cred green tights a la ‘large’ Errol Flynn’s Robin Hood style.

Imagine:  Teenagers tucking i-pods into the brims of their feathered hats, strutting in their stuff in ‘mean ‘n’ lean’ scarlet green, outside the local fish and chip shop. Respect!

Now we are really targeting at the speed of a marketer’s arrow.

And if you are worried that the potential for marketing hoody culture is as limited as the imagination of your average Southend Chav, think again:  A vast hidden market of oldie Hoodys is ready and willing to wear your logo on their lids:  Trappist monks.

Thanks to your brilliantly targeted marketing, monks can start earning respect from a wider demographic beyond their cloisters.  Their hoodys could feature a sloglan reading, ‘ I is DA Devinci Code”  You could even market their homeboy wares such as hand-made monk’s bread, sealed with a ‘hoody- approved’ logo stuck on the packaging.

So once again, thanks to your targeting insights, what is currently a ‘phantom menace’ could become a brand champion, so great that before long even the most respected people in the land – Marketing Directors (who else???)  – will start giving a ‘big-up’ at meetings with their 7Ps posse.

Jonathan Gabay is on CIM’s core faculty.

Be sure to checkout his website: www.gabaywords.com

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Relationship management and e-business papers

While confusion exists about just what differentiates a successful Customer Relationship Management (CRM) implementation from a failure (and just what the heck was CRM anyway), a range of Application Services Providers (ASP’s) have been rapidly expanding their offerings and their customer base. To many their solutions have offered a way of making a version of CRM a reality.  Many companies today question whether their investments in CRM are paying off and others question the huge upfront costs of implementing their current CRM vision. The ASP’s meanwhile are gaining both share of market and share of the ‘C’ manager’s mind.

In this article I will explore the relatively new world of the ASP and their seeming potential to get the CRM equation right. However, I will also look at some realities that many organisations still miss in their headlong pursuit of a CRM success story.

CRM People, Process and Technology

CRM in all its glory is the amalgam of people, process and technology in the pursuit of serving the customer more effectively whilst upping the corporation’s bottom line. A term I have coined for the whole process is CURARE (Cross-sell, Up-sell, Retention, Acquisition, Reactivation, and Experience)[1].  In line with this, CRM as a subset of the Marketing Concept is all about the customer, their experiences, their value and their potential.  If these fundamentals are not addressed then CRM has failed. Now the ASP model described in this article certainly addresses the technology aspects and to some extent the process but the people angle is still given little airtime.

Many of the so-called failures of CRM may be laid at the door of over ambitious senior management who believed that CRM was the silver bullet; overly compliant ‘independent’ consultants that indulged senior management (at a price) and eager sales people aggressively closing sales to beat quota. Yet the reality is that most of these implementations failed because they did not address the people issues that encompass motivation, change and WIIFM (what’s in it for me).[2]Some of the most damaging stories have been around the Sales Force Automation (SFA)/contact management space and so the sale of these large-scale, monolithic, all singing all dancing solutions have faltered.  It appears that interest in investing in CRM with caveats is slowly picking up, but a renovated business model plus extensions is giving the monoliths a run for their money. Quick and successful implementations of the hosted CRM solutions that handle sales force automation and service are really taking place. However, they cannot make up for a holistic approach to CRM that requires more than smart contact management.  The decision whether to go for a hosted solution, however, rests with the organisations choices regarding its real needs. Many organisations see the hosted ASP model as a means of getting what they need now and not having to wait.

However, given the sheer breadth of CRM offerings and the divergent views as to what constitutes a CRM strategy, some organisations that survived the Dot.Bomb period have introduced some real excitement and competitive spirit into the game.

A Renovated Business Model plus Extensions

The renovated model is the ASP that bears an uncanny resemblance to timesharing computing. For those of you old enough to remember, the time sharing computing model dating from the 1970’s offered to share the power of centralised computing power via dial up lines often on a global basis.  The applications were often specialised in nature, complex and difficult to host on a customers machine.  In the 1970’s I worked for one of these companies, ADP Network Services (some others were GEISCO, Comshare, Tymeshare and CSC) they all offered products that enabled organisations to do financial modelling, statistical analysis and project management and to fabricate standalone data bases.  Over time their global networks enabled these organisations to offer applications that became part of an organisations way of doing business, examples being Global Cash Management (for banks) and supply chain management, but these suffered from little to no backend integration.

As the power of the PC grew so the old timesharing model changed and in many cases disappeared from view.  Products like VisiCalc and Lotus123 became available and there was little need for many of the solutions the timesharing vendors had to offer. Their way of making money was to charge for the usage of their proprietary software and data-storage, so the timesharing model gradually faded away, but was revived now and again by the likes of IBM pushing the idea of computing on tap via the GRID. 

Today our thinking has progressed and a number of organisations are now using the metaphors of electricity and the water supply to demonstrate the idea that you no longer need to own the systems you use.  They believe all you have to do is draw down the power you need when you need it. One company views the service they render in a similar way to the promoters of the GRID computing concept: “We see it as a utility - like electricity. You don’t have a power station in your back garden - so why not use the internet as the utility to deliver the services you want without the complexity of a huge IT department,” says Phil Robinson, senior vice-president of global marketing at Salesforce.com. “We are not really a software company - we are more like a telephone company with 213,000 subscribers.”[3]

However, this metaphor for computing grids, ASP and other web services as “utilities” similar to water or electricity supplies is confusing, since there is no real equivalent measure to litres or kilowatt-hours.  Processor cycles are just one component of computing resources, along-side memory, disk storage and bandwidth.  When you add to this the cost of the software, its maintenance and protection then any elementary equation of costs and prices just don’t add up.[4]

Today’s ASP model has many of the attributes of the old timesharing model without being a utility and with some real and important differences that make the value proposition very compelling indeed.

A Model for Today

The most powerful model today is:

A specific suite of applications hosted by their owner

Data is also hosted

Relevant support services are available

Availability is via the internet

You can customise

Shared costs are often reduced costs

Reduced or no capital expenditure required

Payment is by subscription.

This isn’t Timesharing as Your Father New It

Indeed, all of the above could be said about the old style timesharing model but there are a number of major differences today that represent the extensions. Some of the major features of these services:

The ability of the hosted application to be integrated into the organisation’s business. Not by passing disks or memory sticks about, but by linking via the ubiquitous internet solutions enabling full interaction with internal legacy systems with those of the hosted services.

Anywhere anytime connectivity via multiple means, from desktop and legacy systems to mobile and other wireless devices

User friendly intuitive applications with little or no learning curve

Little user training or self training required

Any training as needed is available via multiple channels including e-learning

The ASP model provides integration services, application customisation, training, help-desk and technical support, and even business process analysis

Focused functionality that speeds up routine workflow

Built to support a business’s operational needs

Can be easily customised or straight from the box

Smart extraction, transformation and load tools readily available

Access to the applications is usually under a service level agreement (SLA)

No concern about maintenance or upgrades

The application does what it says it does on the tin.

Contenders for the Crown

Some of the major solutions in the hosted CRM space are, NetSuite, RightNow CRM, SaleForce.com, Salesnet and Siebel On Demand[5]. They offer some of the most impressive CRM suites available today.  The following is adapted from an Aberdeen report [6] and identifies a of number features that are valued in the ASP model for hosted CRM:

1. Integrated suites of CRM functionality, that are moving beyond their roots, (sales, marketing and service).

2. Tiered functionality and pricing that enable end-users to more precisely match online services to their specific needs.

3. Multiple language and currency support.

4. Specialised functionality versions that exploit new technology or that serve to reduce or eliminate restrictions on hosted functionality, including Inter-net connection); Wireless Edition (for wireless Internet connection using Pocket PC, Palm OS, BlackBerry, or mobile phone); Outlook Edition (for close integration and data sharing with Microsoft Outlook).  Some are even offering offline capabilities.

5. Platforms that enable end-users to customise, integrate, and extend the original application set.

6. Sets of wizards that provide guidance and feedback to users to help them optimise their use of the service.

7. Increasing functionality to improve workflow management, outbound marketing and analytics.

8. The ability to buy what you need and a choice of vertical solutions to meet different industry needs.

All are adding functionality such as improved workflow management and analytics to further enhance their services.  Each of the competing products are very close in functionality but tackle their customers needs in different ways.

Some customers recognise that there is still a price to pay for accepting easily customisable solutions and opt for vertical market solutions that reduce the need for customisation even further.  Vertical solutions have built in advantages such as business rules and a data logic that will be industry specific.  The customer does not have to build in the rules, specific numbering systems nor the common reports that their industry normally uses to track customers, services and leads.  In addition industry specific workflow can be catered for and backend integration becomes easier as the database logic is likely to be close to the industry norm.

Collaboration

Some of the vendors are pushing the concept that, their product will be all encompassing whether on or off the web.  Many, however, are embracing the partner or collaboration approach to business.  These partners extend and differentiate the vendor’s products to meet specific niche needs.  In some cases the need has always been there, but the cost of the solution and their method of delivery has been a constraint. 

The encouragement to the 3^rd parties to extend and improve their web based services comes in the form of specially developed toolkits for both Java and .Net.  Salesforce.com has even included a new metadata API for mobile accessibility others are following suit. These additional services add value to the original vendors solutions and can enable both online and offline capabilities to exist and tightly integrate with Microsoft products for example. 

Websource from Webcom

A new collaborative services based solution entering the market is one that supports configuration, pricing and quotation for example.  This extends the CRM model by providing an extension to the normal contact management centric solutions on the market.  This type of service enables part of the sales process to be automated and enriched. It enables the reduction in the cost to deliver, an aid to planning, resource management and cross-selling. 

One such product comes from Webcom, a relative newcomer to the ASP market, integrates with Siebel On-Demand and Salesforce.com and for both companies is one of the only certified partners in this category.  Their WebSource Sales Configurator is a web application available to anyone (i.e. customers, sales people, or channel partners) with a web browser.  The configurator walks the user, customer and or partner through the process of specifying a product by description.  Based on these selections, the WebSource Configurator engine produces, in real time, all pertinent specifications, prices, and fulfilment lead times. 

The world of sales is changing and more and more the rigors of process are being applied. WebSource supports the guided sales process as the configurator interactively guides a customer, step by step through the selection process, mapping their needs to product options and features. This process simplifies the complex product/service choice enabling customers to easily choose the right product or service they need. They get the right quote, for the product that meets their exact needs, their requested date of delivery and all the documentation online in real time.

Additional Benefits

A benefit the ASP can bring to the customer, if handled well, is its ability to enable co-collaboration between customers, partners and the ASP as supplier.  An ASP can improve their service transparently as partners offer innovative, creative and value added extensions to existing products/services (such as WebSource).  The actual customer can also have a co-collaborative role by investing in customisation that is instrumental in making the offering more powerful and useful. This, of course, makes the ASP providers solution more saleable as well and could benefit the new customer that does not have to reinvent the wheel. Many on-premises solutions were customised by consultants and never integrated into the base solution.  This enabled consultants to customise the same solution over and over again with an increasing benefit to the consultancy.  Maybe just maybe (it is happening) the ASP solution will incorporate the best of breed customisation as they happen and will benefit all potential customers. 

Save Money and Learn

One the major cost differentials between the ASP subscription model and the buy it, install it and pray model is initial costs.  An ASP trial could be paid for out of petty cash by a department head. The trial could be the forerunner to a fully fledged evaluation based on at least some real life experience in the use and application of the service.  Compare this to the typical investment cycle in the traditional methods, where multi-disciplinary teams are supposed to be assembled, high powered (expensive) consultants employed and IT dragged kicking and screaming into support the whole show. The time frame for the traditional model before even a prototype of the solution is produced takes anywhere from 6-18 months. The older model of implementing CRM offers no trial, no actual user or internal customer experience, and no learning from mistakes. The timeframe for the ASP model with a small amount of customisation and little backend integration ‘as part of trial’ can be as long as 1-3 Weeks whilst the investment remains enticingly low.

Costing the Alternatives

There are potential pitfalls for the unwary when they make the choice between hosted solutions and an in-house solution. You must also consider what you are trying to achieve because if it’s holistic integrated CRM then you must think seriously about what is actually on offer. The choice to outsource any element of CRM does not mean you outsource the business strategy.  What has to be weighed up is the total cost of ownership for the solution you want as a comparison of going outside, compared to staying with your in-house services provider, your IT team.  For many organisations this has become a non event.  Their own IT teams often present timescales and potential costs that literally frighten their ‘users’ away. However, frightening this cost may appear you may need to pay this bill for full integration and that CURARE feeling that goes straight to the bottom line.  If you are considering an ASP type service to solve immediate shortcomings and/or take advantage of what the technology and process can offer you for immediate gratification then you need a comparison of potential investments (costs)against your potential on-premises solution (Adapted from a Yankee Group Report[7]):

Do you have an understanding of what is required and how does it fit into the organisations overall CRM strategy, if there is one, or how the solution will meet the needs of the division or the group that sponsor it?

What costs would be incurred for software purchase and ongoing license support – how does this compare to the ASP solution?

What are the implementations and deployment costs - how will they differ by solution?

How will ongoing support cost differ?

What will the strategic development costs be: Will the business really build a 24/7 data centre with 99.97% uptime if you don’t go for the hosted service?

Will there be extra costs for international licenses and new hardware for the on-premises solution?

Although the tenor of the Yankee report comes out heavily against the premises based solution – it all depends on your needs.  Their report is built around the SFA model and not a holistic approach to CRM that companies need to take to be really successful.  SFA’s can be a point solution but their real benefits come when they are fully integrated into the business. That many of the hosted solutions are well served by specific integration tools bears out their understanding of this requirement. The ASP model is still value for money.

Holistic CRM

If a company wants to control it’s CRM in a holistic manner, that includes integrating across multiple-channels from data warehouse, business-intelligence, ERP to SFA, CSR and so on, then the ASP model still works with loud caveats. A company can test out multiple vendors solutions at low cost.  They can evaluate claims of ease of use, up-time, vertical market specificity and ease of customisation.  This approach is not possible with the majority of on premises solutions. The model can help an organisation learn about what works and to enable far flung divisions to have state of the art tools without the burden of corporate infrastructures or costs.

Note, these solutions are not focused on building customer relationships as in relationship marketing.  They are designed to support acquisition and to some extent through the service modules retention. They are built around contact management and selling solutions that are often integrated into the services.  Backend integration is still a major issue coupled with the need for customer value analytics, the potential of relationship and event driven marketing. The need for a customer knowledge infrastructure[8] does not disappear, nor does the need to understand and use customer profitability[9] as a tool.

Penny Saved Pound Foolish?

If the company has chosen to take the hosted route to save money then I hope sincerely that they will spend some of their savings on ensuring the success of their CRM investment. The best technology in the world will not ensure success if the users don’t use the system. A little more time and thought into deployment, training and communications will be of immense value.[10]

Given the ever growing number of applications in the ASP model and the partnership from innovative organisations pushing even those boundaries we see a bright and profitable future for hosted CRM. And the answer to the question whether to ‘subscribe to CRM’ is a yes, but with the caveats stated in the body of the article.

[1] CURARE It Could Happen To You – Michael Meltzer

[2] CRM Projects Mean Change: Getting the People Part Right – Michael Meltzer

Also see The CRM Handbook - Jill Dyche – Addison-Wesley- see pages 234-237 for good checklist

[3] Said at the SalesForce.com’s 2005 CRM Success Tour

[4] Adapted from the Economist March 2005

[5] CRM Anytime, Anywhere - Infoworld 1/10/05

[6] Hosted CRM Gains Momentum October 2003

[7] Adapted from Yankee Group Report “Understanding Total cost of Ownership of a Hosted vs. Premises-Based CRM Solution”. June 2004

[8] Getting Started Building A Customer Information Infrastructure – Michael Meltzer

[9]Are your Customers Profitable – Michael Meltzer and Segment your Customers based on Profitability – Michael Meltzer

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Two Masters of IBM Name Brand? …Think

The name IBM is the world's most distinct and valuable corporate identity. Its three letters, parked in this unique random arrangement, are worth many billions of dollars. Meanwhile, Lenovo of China is the new owner of IBM PC and will also use the IBM name for the next five years, while IBM will use its identity for higher-end technology and consulting services. How will all this work?

Currently, IBM's corporate identity is more aligned with high-end technology and enterprise solutions, including blue chip consulting services, in contrast to just generic PC hardware.

This sharing of corporate names now raises three serious questions:

* Will the simultaneous use of the same name in two separate areas create confusion?
* Will the identity of Lenovo be eclipsed by IBM's name and will it take away its strength to stand alone five years later?
* Will the two separate masters of the same brand name sing in total harmony?

Lenovo will start using the name IBM and after 18 months will add Lenovo to the brand, dropping IBM after five years. The deal will also allow Lenovo to use IBM's famous "Think" brand.

Getting Trapped by Master Branding

Master branding, simply put, is a false sense of branding where all of the various corporate goods and services, as well as the rest of the paraphernalia, is parked under one huge tent of a single corporate identity. This approach rarely works as most big corporations have more than one marketing message.

This overbundling of messages can sometimes split the perceptions in the marketplace. Customers at large are very fickle, but despite customers' confusion, corporations often practice this "everything under one master tent" dilemma.

For example, Xerox at the height of its fame and glory, was so powerful and successful in copiers that its entry into computers failed, simply due to its projected perceptions. Customers couldn't believe how such a successful company in copiers could also make computers so successfully. Some $750 million later, Xerox packed up the computer division.

Would Fed Ex be able to bifurcate the perception of it in order to operate other businesses? A Fed Ex airline, maybe, but not Fed Ex cola. Neither would you care to fly a Coca-Cola Airline. The fear of Coke leaking all over the cockpit is enough to scare the customers.

Somehow, we do get trapped in a series of perceptions, and once set, they are very hard to change.

Big-time technology with consulting, and selling rock-bottom PC hardware, are two separate and two very distinct selling propositions. The identity of Lenovo will greatly enjoy the glittering IBM wrapper. It will give Lenovo a great boost.

As the brand IBM PC gets a stronger hold in this fiercely competitive market, the visibility of the IBM PC name could come to the top and dominate the global PC marketplace; let's call it the China Syndrome. This will make it very difficult for Lenovo when it comes time for a departing hug and a goodbye kiss after five years of romance.

Names once set in consumers' minds can't be changed by a serious corporate memo or by placing a series of fancy, full-page global ads. Five years later, Lenovo will have to start a long and hard climb once again.

IBM, a Made-in-China Company?

When a brand serves two different masters, it might also end up with two faces. Here in reality, two separate corporate entities under master guidelines and working plans will be using the same IBM name, while the customers stuck in the daily toil at large will hardly know the background or the difference.

The branding images of an aggressive IBM PC on one side, and on the other, branding images of high-end IBM's big-technology solutions with consulting are bound to sing two very different tunes. Would this cause some confusion and alter some perception over these long five years? Is there is a risk for IBM to be globally recognised as a made-in-China company, at least by the users of all those PCs? Would IBM be better off just to sell the division without the name?

A while ago, IBM made another deal with a great contemporary nerd -- now recently knighted William Gates, of Microsoft the richest man in the world on the Forbes 400 list -- that proves it is all in the deal.

The building of a corporate identity and establishing the perception of that name in the mind of the populace is a very well defined science and should not be confused with design and logo branding. Names are the true deliverer of the message, and they simply park and occupy our subconscious, creating strong perceptions and ideas that directly lead us to buying decisions.

The rules of naming and corporate name identity are very tough to apply, but then again, to have a one-of-a-kind, unique global corporate identity is also the most desired goal of any corporation in the world. One master, one name, one message is always the best.
About the author

Naseem Javed, author of Naming for Power and Domain Wars, is recognized as a world authority on Global Name Identities and Domain Issues. He introduced The Laws of Corporate Naming in the 80's and also founded ABC Namebank, a consultancy established in New York and Toronto a quarter century ago. Naseem conducts exclusive executive workshops on image and name identities issues via web conferences. www.azna.com/ceo.htm

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Was that really someone speaking?

I’ve just come back from a two day CMP conference on the Aurora on the subject of contact centres. We were moored in the mists off Guernsey, unable to escape the subject. However, this had some benefits. One was renewing acquaintance with two of the gurus of telemarketing – Simon Roncoroni and Mike Havard - that I’ve known for nearly twenty years, since the days we worked together on big telemarketing and database marketing projects for BT. It was so nice to spend more than the usual hurried 5 minutes at the end of a conference with them. Another bonus was making new friends – with the assurance that e-mail will help us keep in touch despite our busy lives.

The content of the conference was unsurprising. One strong theme was the determinants of success in contact centre management – where success meant happy customers, happy staff, happy managers and happy shareholders. The main answer seemed to be management focusing strongly on the people aspects and used performance measures for contact centre agents which related to whether customers got what they wanted (e.g. first time resolution rather than length of call). Two strongly negative themes were also present. One was that the strong cost pressures which led to offshore outsourcing tended to produce unhappy customers and poor marketing results, so while cost per call fell, customer loyalty and value per customer both fell. The second was that undiscriminating use of outbound (usually cold) calling – often associated with the cheap call costs resulting from offshoring – was driving up the numbers of consumers opting out through the Telephone Preference Services

One topic that occasionally surfaced threatened most of those on the boat. This was whether the Internet posed a long term threat to the still growing numbers employed in contact centres in the UK – around 1 in 50 of the working population. I’m impressed with the rapid growth of 100% Web-based businesses and businesses that rely strongly on the Web in areas such as travel, financial services and merchandise mail order (particularly for information-based products such as books and CDs, but increasingly in areas such as electrical appliances, clothing and indeed almost any consumer product), and also with the growth in the use of the Web for allowing customers to serve themselves with advertising and information as they begin complex buying cycles (e.g. automotive, property). In these areas, the role of the contact centre seems to be increasingly focused on two areas. One is on handling the diminishing number of customers to whom the Web is unavailable. The other is on interactions where queries and clarifications are for the time being hard to handle on the web – sometimes where customers are out and about on their mobiles and want to continue with a purchase or enquiry but just don’t have access to the Web – although here continuing developments in mobile telephony will make it easier for even the customers who are least expert and perhaps least well –equipped to access the Web anywhere.

However, there are still many interactions where customers want to talk to someone for example, complex transactions, queries from inexperienced customers, acute problems. For the time being, the costs of so doing have led to unwilling customers being forced through complex menus of passwords, account identification and other keystrokes before they get to talk to the “right person”. The anger felt by customers, and in some cases their high rate of abandonment and sometimes subsequent attrition, is giving companies pause for thought. Some have been able to educate their customers that a combination of improved Web access, slightly longer times to answer and a guarantee that they will be answered by a real person is preferable to complex telephonic menus.

Others are using increasingly sophisticated voice recognition and synthesis technology, so that the “person” who answers your call so quickly is not really a person. Where this is deployed successfully, usually in combination with clever procedures for “real” intervention if the dialogue goes wrong”, the performance improvements and cost reductions are dramatic. It is indeed proving a “middle way” between real people and the Web. I look forward to this being a more common part of our customer experience, provided that companies are overt about it. After all, we know when we are using the Web that we are “talking to a computer” and it doesn’t discourage most of us from making quite complex transactions, often involving trust. I’d like to see more companies encouraging us to “talk to their computers”, perhaps even educating us to do it, as most Web sites educate us as to how to get the best from them, through frequently asked question sections and other help functions. As a confirmed user of Internet telephony, I’d also like to see some suppliers offering me the option to talk to their computers through my laptop while I get on with other business.

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