The Adaptive Marketer

February 13, 2011

Adaptive Marketing

Welcome to The Adaptive Marketer.

As I reflect on my career I have been thinking about how the marketing profession has changed over the last few years: the internet, mobile devices, social media and now tablets are just examples of drastic changes in the world we live that are changing the marketing profession.

In a way, the challenges marketers face today with social media (“I guess I need a Facebook page but I don’t know what to do with it”) are very similar with the challenges marketers had 10 years ago with the internet (“I guess I need a web page but I don’t know what to do with it”). The way people interact, research information and buy products has changed.

Consumers are evolving faster than corporations. The gap is a threat for existing businesses and an opportunity for entrepreneurs.

A great case study is Blockbuster. The company recently went into bankruptcy and was de-listed from NASDAQ. What I find really interesting is that the rise and fall off Blockbuster happened over a span of only a few years. The chart below shows the stock price for the last 10 years. It is reasonable to assume the business failed because of an inability to adapt to the new world, a new world that created an opportunity that was captured by Redbox and Netflix.

It is easier to be a historian than to be a prophet, of course. I imagine there were conversations in the Blockbuster conference rooms talking about market dynamics and threats – but it is hard to change the status quo. It is really hard to fundamentally change a business when it is generating billions in revenue

Today marketers at large face a similar dilemma. The marketing tools that worked 50 years ago don’t work anymore. Marketing no longer can be only about creating messages and buying media to broadcast those messages. Today’s marketer must think about how to empower and amplify customers to be advocates. CMOs know they need to balance their investments by shifting dollars and focus to digital and social, but the path is unclear. Marketers know mobile is another disruptive change – few know what to do with it.

As Christopher Stutzman from Forrester puts it, “To Avoid Extinction, Marketers Must Replace The Bad Habits Of Traditional Marketing With The Habits Of Adaptive Marketing”. In short, marketers must become adaptive.

I considered choosing a name for the blog that was centered on Social Media, but then I realized that social media is only one of the discontinuities that is impacting marketers. I already had a blog on Mobility. I have blogged about the web too. If I call my blog something about social media, I would have to change the blog in a few years. Or months.

Peter Drucker published The Age of Discontinuity back in 1968 (before I was born!). he wrote “Businessmen will have to learn to build and manage an innovative organization. They will have to learn to build and manage a human group that is capable of anticipating the new, capable of converting its vision into technology, products and process, and willing and able to accept the new.”

December 30, 2010

Redskins Score with Fourquare – Or did they?

Today’s edition of SmartBrief on Social Media points to a Social Media Examiner blog post with the title “Redskins Score with Foursquare“. The article summary geos on to ascertain “The Washington Redskins have scored a big win with a Foursquare campaign….“

I think this story exemplifies what is wrong with social media marketers today. No discredit to the Redskins (they are a good team), SmartBrief (I read it every day) or the Social Media Examiner, which usually has really good posts. Not a criticism of the marketers who had good intentions and are experimenting with new social tools. My problem is with qualifying this as a “big win”.

The success of the campaign is measured in over 20,000 check-ins at the stadium. Great – 20,000 is a good number, right? Let’s see: We just finished week 16 of the regular NFL season, which means the Redskins had about 1,250 check-ins per game. According to the NFL, the Redskins FedEx stadium holds 86,484 fans. Which means 1.45% of fans could have checked at the stadium.

Where is the big win? knowing that 1.45% of the fans that purchased a ticked made it to the stadium does not seem like a big win to me. There is value in giving your fans a badge, for sure. There could be value in knowing that 30,000 fans checked in at participating restaurants (I assume all 86,484 fans are hungry and eventually eat somewhere during the 16 week period, in other words there is no indication of causality).

Growing the number of followers on Twitter and Foursquare (or Facebook fans) can be a good thing, if used properly. The value of a follower or a fan is zero until you do something with them. As I have said before, a fan or a follower is not really different from an email subscriber: a customer giving you permission to connect with them. The value comes from communicating with the customer with a relevant message that helps them or helps you.

In order to be a big win, the campaign would need to have helped with specific business objectives, such as increasing ticket or merchandise sales, accelerating season pass renewal, increasing viewership of games on TV or driving patrons to restaurants. Until then, this was a cool campaign with good engagement.

Congrats to the Redskin marketing team for embracing social media and my respects for experimenting with new tools like foursquare. I look forward to hearing about real wins.

November 2, 2010

eCommerce is dead

eCommerce is dead, long live eCommerce.

It’s not that eCommerce is going away any time soon, in fact Comscore reported today eCommerce sales in the US went up 9% YoY, but that number still represents about 6% of total retail sales. If you are a retailer, it could be a grave mistake to allocate 6% of your attention and resources to online commerce.

In the last few months the distinction between online commerce and the rest of commerce has been blurring. Today it does not exist anymore. This is why, at last week’s Forrester Consumer Forum, Brian Walker suggested it is time to drop the “e” from eCommerce.

Consider the following facts:

In the US online influenced retail sales are projected to top $1 trillion in 2010.
51% of all retail sales will be made online or influenced online by 2013.
While eCommerce represents 8-9% of retails sales, over 50% of all retail sales are influenced online.
Multi-channel is dead. Customers expect a consistent experience across all-channels : online, in the store, mobile, etc.

There is no separation between online commerce and offline commerce. Clicks and Mortar is gone. Customers today increasingly research online and buy offline. Online in a fundamental part of every purchase experience. There is no eCommerce anymore, online is a core part of commerce in general.

“The future of eCommerce is not as a standalone channel, but as one of the many channels working together “
– Brian Walker, What Every Exec needs to know about the future of eCommerce Technology

We don’t talk about electronic calculators or digital phones anymore. There is only commerce and it spans online, retail and mobile. In the same way, social will be dead soon. Soon there won’t be social commerce, social collaboration or social CRM. Soon the world will acknowledge everything is social and social will be dead too.

October 7, 2010

Building an Effective Influencer Strategy

Influencer strategy seems to be one of the pillars of social media marketing. There are many questions about how to identify, reward and empower influencers. So let’s say you have identified the top 1000 influencers in tour space. And then what? It reminds me of the U2 song that goes “We thought we had the answers….it was the questions we had wrong”.

What is an influencer? Often an influencer is measured in terms of the number of friends of twitter followers. Fans and followers are a measure of reach or popularity, not influence, but it is related. An influencer is someone who can convince other people to buy from you. That’s all that matters. From all the options for social media marketing activities the only ones that matter are those who result in someone buying from you.

“influencer” is not a label for people in general. It’s not a species. There is no influencer gene that I know of. People have different levels of influence in different topics, it is contextual. For example, I am an influencer when it comes to photography, but a normal guy when it comes to sports and very much not an influencer in terms of cosmetics.

How do I know I am an influencer in the context of photography? Because many of my friends and colleagues have purchased digital cameras based on my recommendations. Many people I don’t even know have done the same – people I have never met, never exchanged emails with, people that don’t follow me. How? I have influenced them because they have read my opinions online and relied on my knowledge to make a buying decision. They trust me because I am a a normal consumer, like them, and I have lots of passion and experience about photography.

All consumers, myself included, avoid or ignore advertising. When exposed to advertising most people don’t believe what it says. Grab a photography magazine and look at the ads: all of them say their cameras are awesome. People don’t trust marketers. But they trust people like them. They will be influenced by other customers who have experience with the products they are considered. People who like talking about their experiences, share their knowledge and opinions are advocates.

The most common influencer strategy is to find the top influencers and reward them for their advocacy. Depending on the nature of your business, this could be a good strategy – or not. Often these customers, identified as influencers, are already predisposed to buy. Surely they deserve some recognition and special treatment, and you must empower them to be advocates. However, you cannot influence the influencers easily. They are experts; they know their stuff and probably know more about your products than most people in your company.

Here is an interesting idea: instead of finding influencers why don’t you create influencers. Or better said, you can turn a customer who is very satisfied into an advocate by empowering him or her to influence others.

Imagine you are in the banking business. Now imagine you have a customer that is really happy with your checking account, the service from your credit card and your credit services. This customer is willing to tell other people about how great your bank is.

Imagine how powerful it would be to put this customer in a center of a room full of customers who are interested in checking accounts. Imagine if he had the ability to share his experience with your bank, in his own words, to all these potential customers. That would be really powerful, right? This room full of prospects is your website, they are visiting the “checking accounts” page, or the “credit cards” page. They are interested in your services, why else would they be there?

That’s the power of empowering customers to share opinions and experiences (what we at Bazaarvoice call reviews and stories). They allow customers to become influencers, enabling “normal” people to become advocates for your brand, in a very authentic and very convincing way. By enabling this conversation on your site, on your product or service pages, you are creating an influencer strategy that results in more sales. It’s a proven system.

A great thing about a customer influencer strategy is that you don’t even have to find these influencers. You don’t have to identify them or know their name or pamper them with special treatment. However, you can still recognize them. You can give the more influential customers a badge that recognizes their contributions or their expertise.

And this recognition can be helpful for customers. It helps them find among dozens of other customer opinions and give content to these opinions. In fact, customers can vote on the helpfulness of other customers contribution and sort them based on their helpfulness. The helpfulness votes help identify the most influential customers, those that write reviews that help customers make decisions, which earn them badges in turn.

All these pieces work together to promote advocacy, identify and recognize influencers in a way that helps customers buy. This system of advocacy and influence is customer centric, customer-driven and helps customers. Except for the sales, which benefit you and your business.

10 ideas for developing an influencer strategy:

An influencer is someone who helps other people buy from you
Influence is contextual
Popularity is not influence
Passion, knowledge advocacy and popularity are factors of influence
Everyone can be an influencer about the topics they are passionate about
You don’t have to know your influencers (but it can help). Instread of finding them allow influencers to sel-identify
Influencers are “turned-on” by empowering them to be advocates
Most influencers are hard to influence. You can’t buy influence – stay authentic
Your most influential customers are already predisposed to buy from you
Influencers are often driven by status: recognition is more important than rewards
(bonus) If your products suck it will be really hard to find influencers. The opposite is true, of course.

August 23, 2010

Are CFL light bulbs practical and safe?

A few days ago I wrote an off-topic post complaining “green” builders are not using CFL lights. I got a number of responses, including one from a homebuilder association that defines the TX Green certification explaining CFLs have mercury in them which creates a number of concerns: environmental, breakage and disposal, in addition to additional cost. When I got these responses I felt like and idiot for writing about the issue if there is a good reason why CFLs are not used. But then, I spent some time doing research and arrived at a different conclusion. There are easy ways to deal with every one of the potential issues.

First, the good news. Incandescent bulbs are being banned in the EU.

Why is this important? For our a small subdivision like the one where we live with 200 Homes, replacing 70 light bulbs per home (the number I replaced) would mean 14,000 CFL light bulbs replace the same number of incandescent bulbs, resulting in over half a million dollar in electricity cost savings, preventing over 1.5 million pounds of coal from burning and a reduction in 6.3 million pounds of greenhouse gases PER YEAR.

Now let’s look at the key concerns from the builder:

1. Mercury in CFLs

Manufacturer investments in technology over the last two decades have reduced the amount of mercury used in lamps by nearly 95%. The National Electrical Manufacturers Association (nema.org) has established a maximum of 5 mgs of Mercury per light bulb, but many of the latest modern have as little as 1.23 milligrams. According to the EPA, a 13 watt CFL over 8,000 hours of use could result in 1.8 mg of Mercury emissions versus 5.8 mgs for an incandescent. The CFL results in almost three times less mercury emitted to the environment. “CFLs result in less mercury in the environment compared to traditional light bulbs“ (5) EPA adds: “Because CFLs also help to reduce greenhouse gasses, other pollutants associated with electricity production, and landfill waste (because the bulbs last longer), they are clearly the environmental winner when compared to traditional incandescent light bulbs.”

2. Dealing with broken CFLs.

If a CFL containing the maximum allowable, 5 mg of mercury, breaks in the average bedroom with a volume of about 25 cubic meters, assuming all the mercury vaporizes immediately (an unlikely occurrence), would result in an airborne mercury concentration of 0.2 mg/m3. This concentration will decrease with time, as air in the room leaves and is replaced by air from outside or from a different room, likely approaching zero after about an hour or so. This level and duration of mercury exposure is not likely to be dangerous, as it is lower than the US Occupational Safety and Health Administration (OSHA) standard of 0.05 mg/m3 of metallic mercury vapor averaged over eight hours. (3)

3. Disposal of broken CFLs

CFLs can be disposed of on any CFL Disposal station. IKEA, Home Depot, Ace Hardware and other stores offer CFL drop-off stations. In Austin, businesses can drop off CFLs at the City of Austin HHW Collection Facility, . Additional locations throughout Texas found at http://www.tceq.state.tx.us/assistance/hhw/contacts.html Individuals can bring up to 5 gallons of waste for free. Commercial recycling for CFL light bulbs is quite inexpensive. Here in Texas, Waste Management will recycle 125 light bulbs for under $0.72 each. (10). There are a number of commercial recycling businesses.

The law in Texas allows businesses to collect their CFLs for up to a year prior to disposal or recycling. (11). So if a CFL breaks during construction, it can simply be stored in a closed leak-free bag inside a properly labeled container like a trash can in a central location. The builder could store all broken light bulbs for up to a year then send them to the HHW collection facility (an 8 minute drive from our subdivision). Alternatively, if two light bulbs are broken per house, every 75 homes built the builder would spend $120 (shipping included) sending all these light bulbs to a commercial recycling location.

4. Cost

Come on, $100 cost per home is more important than saving a million dollars, 6.4 tons of green house emissions and half a million pounds of coal burned? If that’s the case then it would prove that builders are only saying they are “green” as an advertising scheme to sell homes not because they really care about the world. Here is how you could deal with the cost:

a) You could apply part (3% to be exact) of the $3,000 “Green” rebate from the City of Austin to pay for the CFLs

b) You could give your customers the option to pay for them – I would gladly have paid $100 plus, let’s say $10 for disposal of any broken CFLs, and I would have volunteered to take any broken bulbs from my house to the disposal center.

c) You could increase the price of the homes by $100. As a customer, adding $100 would not have made any difference for the average cost new home. If the salesperson would have quoted a price $100 higher at the beginning no one would notice.

d) You could increase the price of the house by $200. The only reason the builder had an “EcoGreen” sign outside of the home, the only reason they were promoting their certification and the only reason they had EcoGreen brochures along with the home builder brochures is because thy feel it would be a differentiator that will help them sell more homes. They didn’t do it to brag about how much they love the environment. Builders could increase the price of their homes by $200 or $500 and promote “The only builder with all CFL lighting in Texas”. For a LOT of people , this would be a very good incentive to do business with this particular homebuilder. I know because I asked many of my neighbors. Builder would be doing the right thing and making more money.

e) Builders could eat the $100, if they really care about the planet we live in and the plane you are leaving for your children.

f) Builders could do a combination of all the above. Part of the money comes from the rebate, a part from the customer, a part from the rebate, a part from their profits, and still enjoy the marketing benefits of being really green.

In conclusion: there is no good reason why builder should not stop using incandescent bulbs right away and start using more CFLs. Now if you want to go green all the way and have some extra coin, another option is LED lights which are mercury-free and even more efficient than CFLs, but cost about $50 a piece.

Have you replaced your light bubls yet?

CFL Benefits
Each CFL can $30 in electric costs, Prevent 110 pounds of coal from being burned and Reduce greenhouse gas emissions by 450 pounds (1) Lighting accounts for 38 % of residential energy consumption (2) CFLs produce about 70% less heat than standard incandescent bulbs, so they’re safer to operate and can help cut energy costs associated with home cooling.
(4) EPA’s statement “Switching from traditional light bulbs (called incandescent) to CFLs is an effective, simple change everyone in America can make right now. If every home in America replaced just one incandescent light bulb with an ENERGY STAR qualified CFL, in one year it would save enough energy to light more than 3 million homes. That would prevent the release of greenhouse gas
emissions equal to that of about 800,000 cars. “ Sources and resources:

(1)    MSNBC http://www.msnbc.msn.com/id/17831334/
(2)    Energy Information Administration, 2003 Commercial Buildings Energy Consumption Survey
(3)    http://www.treehugger.com/files/2007/05/ask_treehugger_14.php
(4)    GE Lighting http://www.gelighting.com/na/home_lighting/ask_us/faq_compact.htm#epa_recommend
(5)    EPA’s CFL FAQs http://www.gelighting.com/na/home_lighting/ask_us/downloads/FAQsAboutCFLs.pdf
(6)    TCEQ http://www.tceq.state.tx.us/comm_exec/forms_pubs/pubs/rg/rg-377.html
(7)    www.Earth911.com
(8)    Recycling guidance to businesses http://www.epa.gov/epawaste/hazard/wastetypes/universal/lamps/recycle.htm
(9)    NEMA www.lamprecycle.org
(10) Waste Management Lamp Tracker https://www.wmlamptracker.com/v2/lamptracker_compact.cfm
(11) Texas Regulatory Guidance RG-377 January 2007
(12) GE Lamp recycling information page http://www.geconsumerandindustrial.com/environmentalinfo/regulations_resources/recycling_information.htm
(13) Incandescent Bulbs are banned in the EU http://earth911.com/news/2009/09/03/incandescent-bans-initated-in-europe-set-for-u-s/

August 18, 2010

The 10 Rules of Customer Centricity

I was reading Bruce Temkin’s report, The 6 laws of customer experience, which has a number of similarities with an article I wrote for 1 to 1 Magazine published in January, so I decided to post the full article here:

The 10 Rules of Customer Centricity

Build long-term relationships and business success by acting in the customer’s best interest.

Many companies claim customer centricity in their list of company values, in their organizational tenets, or in their mission statement. Being customer centric is not easy. Use these 10 rules to assess your organization’s customer centricity:

1. Co-create with customers. Involve customers in the design, test, and ongoing improvement of your products with tools like advisory boards, customer design meetings, and beta programs. Don’t focus on features and specs; instead focus on how you are helping customers get a specific job done. At Threadless, for example, customers design, vote on, and order shirts before they are produced. Starbucks captures customer ideas and feedback via StarbucksIdeas.com.

2. Incent your sales team to be customer centric. Most sales teams get bonuses based on quarterly or monthly sales and profitability, yet satisfaction and loyalty are the leading indicators for future profitability and long-term success. At leading companies, customer satisfaction is measured twice a year and the results directly impact executive compensation.

3. Empower front-line employees. Ritz-Carlton hotel employees at all levels are empowered to spend up to $2,000 per guest to do whatever needs to be done to make customers happy.

4. Happy employees = happy customers. Simple, but true. A company that values employees is a company where people enjoy working and, therefore, they do a good job.

5. Your customers are not assets, they are your reason to be. Peter Drucker said the purpose of the organization is to create a customer. The relationship you build with customers is, therefore, the foundation for success. Are you trying to extract as much money from customers or are you building relationships? Are you charging “convenience fees” that generate what Fred Reicheld calls bad profits like car rental companies that charge outrageous prices for gas? Kimpton Hotels’ loyalty program members are delightfully surprised by getting $10 worth of mini-bar items for free.

6. Contact Us. Really. Go to your website and measure how long it takes you to find your organization’s contact information: a real email and phone number. Pretend to be a customer to learn your response times via email and your toll-free number. At customer-centric companies people answer the phone within seconds, executives answer customer calls directly, and they publish names, phone numbers, and email addresses on their site.

7. Listen to customers proactively. You can do this the old-fashion way via customer service reports that feed product development, customer surveys, and other tools. Today companies are also required to listen – and respond – to the social web: Twitter, blogs, Facebook, etc. Beyond listening, you must empower people to respond and to fix problems. Do you have the processes to capture, organize, prioritize, and act on what you are hearing?

8. Focus on the customer experience. Get in your customer’s shoes. Pretend to be a customer to understand their end-to-end experience and what goes on in their mind at each step. Executives at a courier company went through the experience of actually shipping a product and tracking it to delivery. Software product managers go to customer’s homes to witness their experience from installing to using to troubleshooting the product.

9. Customer orientation. This means putting the customers’ needs first. The customer is not always right, but you really need to focus on making them happy. I owned a computer store in the 1980s. A customer walked in ready to buy a new computer because the old one was very slow. I suggested buying more memory, which solved the problem. The customer was blown away that I offered an inexpensive product when he was ready to buy a new computer. Not only was he my customer for life, buying multiple computers and accessories, he also referred lots of business to me and we became great friends.

10. Make money from your customers. Making money from customers is OK. They will gladly give their money to a company they value. Ritz Carlton estimates customer lifetime value at over $1 million – what is yours? An unhappy customer will probably tell a dozen people about their bad experience. Acquiring a new customer usually costs $300 or more. It is a better business proposition to keep your customers happy and make money from them over time by building a long-term relationship, not a transactional one that ends at the cash register.

Truly embracing customer centricity requires transforming the organization. The book The Discipline of Market Leaders suggests that organizations align behind one of three core disciplines: operational excellence (think McDonald’s), product leadership (think Apple) or customer intimacy (think Nordstrom). The “chosen” discipline defines the company strategy and culture and therefore the chances for success. Embracing customer centricity presents an incredible opportunity for differentiation, becoming a source for competitive advantage.

August 17, 2010

Green builders don’t act so green

This is a transcript from an email tip I sent to the Consumerist

We built a new home in Texas about two years ago. The builder told us it was an “Eco smart” house and that it was “Green Built TX” certified. They had yard signs and brochures to explain how green the builder is. We were shocked to find out most of the light bulbs in out house were incandescent. Isn’t replacing bulbs with CFLs the simplest, most basic way to save energy?

Our bathrooms, for example, have a lighting fixture with six lights, which means every minute the light is on, those six lights are consuming 360 watts. I replaced all six lights with 9w CFLs, now consuming 54 watts total – almost 7 times less energy. The CFL light bulbs are only about $1.50 at Home Depot or WalMart, I am sure the builder can get a better deal. I had to replace over 70 light bulbs in our house (picture of old light bulbs attached). I probably spent $150 total, a number that is absolutely insignificant relative the price we paid for the house.

The kitchen area, for example has 4 light bulbs, all controlled by a single switch, consuming 240 watts instead of 52 watts now with 13w CFLs. Every home in the neighborhood has an outdoor light outside of the garage with an average of three 60-watt light bulbs that are usually left on overnight. That’s 18,000 watts consumed for every 100 homes. All night long. Just for outdoor lights.

What is worse, is that we threw away over 70 perfectly good incandescent light bulbs that I paid for (when I bought the house), which are by now in some landfill. In addition, I had to go through the inconvenience of buying and replacing 70 light bulbs, not including some I have not been able to change because they are too high and I cannot reach them with a normal sized ladder.

I called the builder, who told me the “certification” does not require all light bulbs to be CFL, just a certain percentage. The builder probably installs enough CFLs to meet the minimum requirement to be certified.

Selling “green” homes with incandescent light bulbs is deceptive and misleading. Building new homes that consume so much additional electricity to save $100 is absolutely irresponsible in this age. At the very least I would have liked to have the option to pay $100 for the upgrade, which would save thousands of dollars over a few years in energy cost and is the right thing to do.

I suggest selling new homes with incandescent light bulbs should be illegal.

My other idea is to offer homes with solar-powered A/C units. After all, most of the time you need the A/C running in Texas there is plenty of sun shining. It would be much more affordable than full solar systems which require many more panels plus a battery…but that’s a subject for another post. Maybe.

July 20, 2010

Sprint’s Turnaround Strategy: Customer Centricity

This is a cross post from the Bazaarblog.

Traditionally, companies have focused on these key areas: sales, finance and operations. This is natural because they provide real, solid, measurable numbers: you can quantify cost savings from operations and you can measure sales in very specific ways (by region, by product, by sales rep). These are the metrics that count, right?

Sales and operations are not the only important measurables. They’re like the engine room of a ship. It’s important to make sure the engine runs smoothly, but how important is this if you are headed in the wrong direction, or toward an iceberg? I think Peter Drucker summarized perfectly “Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”

Marketing can be the internal champion for a new customer-centric focus. Dan Hesse, CEO of Sprint, took the stage at the Forrester Customer Experience Forum in New York this week to talk about Sprint’s customer-centric approach. Imagine his outlook and options on his first day as CEO: In 2007 the company lost almost $30 billion dollars. In Q1 2008 alone the company lost over a million customers.

If Hesse was like most CEOs, he would have spent all his time in the engine room, believing this was the heart of the problem—the heart of any possible positive change. He would have been under enormous pressure to engage in broad cost-cutting and to focus almost exclusively on improving internal efficiencies and operations. And he probably did a fair amount of this type of work. But Dan’s number 1 priority was improving customer experience. He knew that making customers happy is a good strategy for long-term success. He refocused the entire company around three key initiatives:

Customer Experience
Build the Brand
Conserve Cash

Every single Sprint resource was realigned around these three objectives. During his talk, Hesse outlined his “magnificent seven” change-drivers:

Align compensation and rewards
Knowing the agenda and knowing what the boss checks on
Root-cause analysis/data
Accountability
Project leadership
Simplify
Living the brand

Instead of going on a cost-cutting spree and inflating prices, Dan chose to simplify Sprint’s product offerings, making them easier to understand, less expensive to customers, and ensuring a better overall customer experience.

“Our core problem is cost cutting that led to customer satisfaction problems”

The result? $2 billion in savings just from customer service operations. Simplicity and better customer experiences result in fewer, shorter calls to customer service. Sprint was recognized by Forrester by having the highest improvement in customer experience across all industries by earning a 15-point jump. They were recognized as #1 in customer satisfaction for mobile, and J.D. Power recognized Sprint with a 17-point improvement.

The effect on earnings? In Q1 2010 the company reported their first profit (EBITDA) in a long time, the best improvement in net post-paid customers in five years and the first sequential increase in net revenues in three years. Sprint is not at the finish line, but is clearly getting there.

Hesse understands the value of satisfied customers and the power of word of mouth:

“In terms of how much will it influence customer purchase behavior, a TV ad would probably be a 1. A really good TV ad is probably a 2. Someone you know telling you about a product they like is a 9 or 10.”

March 2, 2010December 27, 2021

The Criticality of Company Culture

Last month 1 to 1 magazine published my article “The 10 rules of Customer Centricity” that talked about how customer centricity needs to be a company strategy, not a motto for the marketing team. My last post about Why I joined Bazaarvoice talks about the Bazaarvoice culture and how it was a key factor for me to join this company. Again, culture should not be something that is done by HR, framed and then ignored – its central to a company’s strategy.

The book The Discipline of Market Leaders is one of my favorite books on strategy, I encourage you to read it. It makes the case for three central disciplines that define a company and its primary operating model and its product strategy. The book talks about three main disciplines: Customer intimacy (think Nordstrom), Product Leadership (think Apple) and Operational Excellence (think Dell or McDonald’s). Companies can’t do all three, they need to pick one and run with it.

Culture = Strategy

Company culture is strategy. It defines your company. It defines who you hire. It defines what you value and reward as an organization. It defines how you create products and services. It defines who you are. It determines your success.

The Engineering Culture at Motorola

Motorola has been for many years one of the most innovative companies in the planet. While I was working there I had the opportunity to visit the Motorola Museum. I was amazed about the number of firsts: From the first car radio (did you know this is the origin of the name -as in Moto- Rola?), the first square TV to almost everything RF/radio related in the world including the system that provided communication to the Apollo XI Lunar Lander.

Then it hit me: Motorola had invented so many markets yet it had been unsuccessful in maintaining market leadership. The company invented the cell phone and by then it had secondary market positions both on the cell phone business as in the infrastructure side. The answer, for me, was the company culture.

An interesting fact: Motorola employees wore badges of different colors based on the number of patents under each employee’s belt. Engineers worked with pride with a silver or golden ID badge. People knew you had to be an engineer to be successful at the company. There were POPI (protecting our proprietary information) audits at every office ensuring nothing as trivial as an org chart or was left at your desk.

As much as Motorola excelled at creating products, it failed at bringing them to market. I saw tons of technologies that should have been successful like the Canopy broad-range internet access network. But most of these failed because marketing was not a core competency. The engineering -centric culture is killing the company. I really hope it can transform itself quickly enough and be a leader again.

The Product/Launch Culture at Microsoft

My four years at Microsoft were some of the most amazing of my career. Ultimately, I decided to leave because of culture. Everyone knows Microsoft hires type-A personalities. Many people know there is a performance grading curve for employees and that the performance measurement is exclusively focused on the fiscal year at hand.

All these factors result in a culture where there is no room – especially in a company this size- for long-term planning or for learning and optimizing a project. It is all about launching new stuff. From my first few weeks I was surprised by the number of emails that announced new things – new products, new initiatives, new marketing campaigns. There was no discussion about monitoring, learning, optimizing. Projects need runway to mature and become successful.

Marketers received a plaque with over a dozen slots for adding badges for each product they launched. I was part of the Visual Studio 2005 launch team. After the product was launched in November 2005, many people left the team starting with the GM. After all, they had a successful product launch under their belt. It was time to get promoted and move to another group. A former boss and one of the people I admire is John Smolucha who shared an analogy about the Columbia shuttle launching and immediately everyone in Houston command center going home. How would you feel if you were an astronaut? “Houston?….Houston?… we have a problem.” . This is how many projects felt at Microsoft.

A great example of this culture is Bing. Microsoft search engine became MSN Search which became Live Search and is now Bing Search – all over just a few years. Maybe next year a new GM will come on board and will re-launch it as something different.

The Culture at Bazaarvoice

It just makes sense: if you focus on making your employees happy, you will be able to attract (and retain) the best talent and everyone will be motivated to do their best job. Customer service experts know happy employees translate to happy customers. The rule applies equally to every area in the organization.

This is how Bazaarvoice defines its culture (from the website): “To us, culture is more than perks and free sodas. It’s the way we work with each other and create a place where people want to work every day, have the opportunity to rapidly innovate, and foster an environment that brings out our best.”. There are many blog posts about culture for you in the Bazaarblog.

In Brett’s words, “The importance of focusing on culture is greater than ever. I spend around 15% of my time focused on culture, and I believe it is largely responsible for our success as a company.”

As I was finishing this post, I read Behind the Cloud, Marc Benioff’s book about building Salesforce.com which reinforces this idea: “My summers at Apple had taught me that the secret to encouraging creativity and producing the best possible product was to keep people fulfilled and happy. I wanted the people who built salesforce.com to be inspired and feel valued. “ (Page 11).

Kip Tindell, CEO of The Container Store, recently said in an interview ” It was Milton Friedman who said, “the only reason a corporation exists is to maximize return for the shareholders.” Well, no. Not really. We actually put the employee first. We don’t even put the customer first. Now, you know we love our customers. But we put our employees first. We believe that if you put the employee first and take better care of them than anybody else, they will take care of the customer better than anybody else. And if those two are happy, if you have the happiest employees and customers around, ultimately your shareholders are very, very happy as well.”

I’ll end this post by summarizing on one point: Culture is not a task for HR or for a marketing VP. It must come down from the top and lived by everyone in the organization: your culture is your strategy.

February 27, 2010

Joining Bazaarvoice

It’s been almost three months since I joined Bazaarvoice as Sr. Director for Product Marketing. It has been a very rewarding and fun experience. But let me start from the beginning:

I worked for Vignette in a similar role for about a year and a half. Then the company was acquired by Open Text and I was offered a position to run strategic communications, which I did for a few months. My team included PR, AR, social media and a new CXO/executive relationship program.

This was a very exciting position from the perspective that it was all about influencer marketing. However, I had significant differences of opinion with the senior management team in terms of strategy, company culture and marketing position. Once I started working on that position I felt like I was an evangelist for a religion I did not believe in. Almost at the same time, Bazaarvoice presented me with a unique opportunity.

My Social Media background

For the last almost 10 years I have been working with social media and online communities. At Motorola we created the first mobile developer communities back in 2001 for the earliest smart phones. Developers have relied on peer-based online and offline communities for learning and support. Then I had the unique opportunity to lead Microsoft’s community strategy starting in the developer division and as the driver for the Broad Customer Connection initiative company-wide. Looking back, we did some pretty amazing stuff back then that would still be considered leading edge today.

During my time at Vignette, I helped the company transition from Enterprise-content management to a vendor that uniquely understood how to manage both enterprise content and social media content. The Vignette social media strategy was looking good until the acquisition.

Four Areas of Social Media

I see four discrete aspects of social media as they relate to how companies interact with it.

First there is the Social Web made mainly of social networking sites: Facebook, Twitter, Linked In, Flickr, eVite, eBay, Slideshare – etc. There are many case studies about how companies are using these tools to connect, listen, respond, interact with customers. I have a pretty cool story I will share in a future blog post.
Peer support communities proved their value many years ago. This includes developer communities, support forums, NIkeID and others that are mainly knowledge based or break-fix.
Social media in the enterprise, better known as Enterprise 2.0 took the concepts of social media and Web 2.0 into employee Facebook-like applications converging with collaboration and knowledge management. SharePoint and Salesforce Chatter have a good chance of dominating this market.
Standalone marketing community sites. Often times these appear as complements to brand sites, as promotional micro sites or as standalone sites that aim to capture a conversation, increase engagement and somehow magically produce business results. I feel like this is the least mature aspect of social media. This is the space where I will focus the rest of this post.

Build it and They Will Come

The initial idea was great. Essentially marketers love the idea of being the center of attention, of hosting the conversations around their brand and their market. If your business is selling guitars online it would be very compelling to be the Facebook of musicians and host the space where they would gather and chat about stuff, giving you “permission” (in Seth Godin’s terms) to market to them and turn them into buyers.

The problem: Facebook won. Music aficionados are on Facebook. They are probably also fans of organic food, classic rock, the Gap, etc. But they don’t think about these brands when they want to discuss topics related to these markets (food, music, clothing) because their conversation is happening on the social web, where their friends are today. In Jeremiah Owyang’s words “fish where the fish are”.

Think about it from your perspective: how many things are you passionate about, how many brands you like. Do you maintain a profile in each of these brand’s communities? Are you active there? Or do you do all your social webbing on Facebook and twitter?

The idea sounds great but it’s a myriad. I recently blogged about this in what I think is a controversial post that includes some informal research about the failure of online marketing communities.

Where’s the beef?

For the last two years companies have been hiring social media experts. Many of them are good communicators, experts in the use of social media tools but lack the track record of driving real business results. Companies realized they needed to do something in social media and given their lack of experience CMOs had to trust social media experts and give them free reign to do whatever they wanted. They wanted a social media strategy.

Last year companies started asking themselves, after doing this for a few months, Where is the ROI? How much should we invest next year in social media? How do we know what tools to use? Facebook fans don’t make payroll. Business week published an article “Beware of Social Media Snake Oil” based on ideas from David Armano. A year ago, my presentation at Web 2.0 focused on the lack of measurement and idea that you don’t need a social media strategy because social media is a tool that should support business objectives.

Some stats: (about a year old) . eMarketer found 84% of marketers don’t measure social media ROI at all. A survey I did with the Marketing Leadership Roundtable shows only 12% of Web 2.0 initiatives are rated as effective. The Marketing Sherpa Social Media benchmark shows social media has been most effective at influencing brand reputation and awareness, improving search engine rankings and increasing traffic.

Social Media has produced soft benefits: awareness, participation, customer feedback. There is no question Social Media is a great tool to interact with customers, listen, broadcast and solicit feedback. What about making real money?

Enter Social Commerce

Social commerce is the practice of leveraging customer interactions to drive real business value. It started by taking customer’s opinions to help other customers make decisions on what to buy: ratings & reviews. Today, ratings and reviews are one of the primary drivers of eCommerce sales. Think about the last time you bought something on Amazon. As soon as I land on a product page I scroll down past all the traditional marketing content to land directly on ratings and reviews.

Now social commerce leverages not only opinions – also knowledge (questions and answers), experiences (stories), the Social Web, mobile shopping and a number of innovative tools. The direct correlation to business results is proven: higher sales, lower costs, reduced returns. For more stats see www.bazaarvoice.com/stats . Furthermore, social commerce can help companies breathe customer oxygen to understand the voice of the customer and derive insights that transform every aspect of the organization.

The secret is in what I call contextually relevant community. It is about using social media in a way that is relevant to the user based on their intent (what they are trying to accomplish) and their desired experience (i.e. the websites where they go to accomplish this). Social Commerce makes relevant, trusted advice, opinions, knowledge and experiences available to people as they look for products, decide what to buy, or learn how to use a product.

The conversation is not about what you had for lunch last week or the pictures of your dog: it is about the relationship that exists between you and the brand: the products you like, the people that enjoy products like you , your knowledge about these products, experiences you have had with them. It is contextually relevant to the brand as well.

Why Bazaarvoice

Leaving a global, public company with hundreds of millions of dollars in sales, in a job where I was innovating how to work with influencers and had three directors reporting to me to a small startup in Austin was a difficult decision. There were tradeoffs and risks.

Today I am 100% confident I made the right decision. There is energy and passion at this company. I work with really bright people. Our executives are smart. Brett, CEO inspires me. I enjoy every day at work. My wife told me after two weeks I am a different person at home. She loves Bazaarvoice too.

It’s good to be part of a successful company. Today, Bazaarvoice serves over 600 of the leading brands globally, including over 50 of the top 100 retailers in the U.S. We are hiring as fast as we can. There are probably 80 open positions on our website today. We have close to 10 full-time recruiters. Our ability to grow is only limited by our ability to hire top-notch people.

If you have heard about Bazaarvoice you probably heard about the culture. Our CEO has made it a priority. Proof? The vacation policy is entirely based on trust: “take as much as you need”. Many employees enjoy the weekly massages, guitar hero in the game room, free snacks, etc. Others enjoy the wacky sense of humor. Austin Business Journal named Bazaarvoice the number one place to work in Austin. All the pampering reminds me of the dot com days, except that this company is a real business that is growing on solid footing based on delivering real value to our clients.

Steve Joined Bazaarvoice a few days after I did. We have similar views.

At Bazaarvoice I can employ my experience in product marketing, my passion for customer centricity my background in web technologies and e-commerce and my 9+ years of experience working with social media. It’s a pretty good fit.

In these first three months, my team has delivered tremendous value for the organization. We are making a difference. I feel very proud of what we have done. I feel super excited about where we are going. Fasten your seatbelts. It will be a fun ride.

Hey, if you have read so far – thank you. This is a long post. I owe you one. Leave a comment. Say Hi. My promise is to blog more often. Here and on bazaarblog.com

Gerardo.