Category: Leadership

Customer Trust

The Important Lesson You’re Missing from the Facebook Data Debacle

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Facebook didn’t fail to protect user data in accordance with its terms of service. Facebook didn’t fail to make itself transparent enough so that users understood how their data would be used.

Facebook failed to keep its promises to its users.

This is the lesson you and your company can take away from this debacle. It’s vitally important to you because, while it’s really hard for most people to leave Facebook, I’m pretty sure it is not nearly as hard for most of your customers to leave you, should you break your promises to them.

How did Facebook break its promises?

To answer that, let’s start by defining a promise. We think of promises as commitments we make to other people about things we intend to do. But for a business, a promise is more than that.

A promise is made when a business commits to using its capabilities to meet a need or aspiration of its customer.

In the B2B world, this might look like something as simple as a marketing automation vendor promising its product will always get your campaigns scheduled and launched correctly, and tracked as you instructed. Or it might look like an intelligent system promising to understand your customer interactions to help you identify your happiest and least happy customers.

In the second example, if the system got it wrong enough of the time so it became unreliable to use as a basis for customer-related decisions, then it would be breaking its promise. I am not suggesting it needs to be perfect. But it does need to be consistent and reliable.

You make promises to your customers every day. Some have to do with your product or service. Some with how your people interact with and support them. Others might be about what you are going to do for them in the future. All these promises are important and are the reasons your customer bought from you in the first place. The quickest way to lose a customer is to break a promise you’ve made. The easiest way is to fail to understand what promises your customer thinks you’ve made.

Back to Facebook

Facebook’s core promise is to connect people to their friends and to things of interest to them (news, events, companies, etc.). Part of that promise is that, in exchange for doing this at no cost, Facebook will show you paid advertising, based on the data you provide.

That last bit is important. Most people know they are providing data such as their name, location and age. Most people don’t know they are providing information about their preferences, political views, browsing habits and so much more.

The promise of a free service in exchange for advertising is not a hard concept. Ad retargeting is. A spokesperson for Mozilla said it well: “Tech companies can’t expect most of their users to understand how their service works.”

That’s where Facebook went wrong.

Facebook works on the premise that, by publishing a terms-of-service document and making settings available to control use of personal data, every user will know exactly what it all means. That’s not even close to true.

In fact, most Facebook users think Facebook keeps their information relatively private, and that by having a password, only they can get to the data they enter. That’s also not even close to true. It’s even reasonable for any Facebook user to believe the persona information they enter is a kind of a public secret among them and their friends. Even many sophisticated Facebook users — ones who understand how an advertising-supported model works —  with whom I’ve spoken are surprised at how much data Facebook has shared, and how freely Facebook’s advertisers are permitted to use and distribute that data.

And there’s the problem.

The gulf between what Facebook thinks it promised and what its users think it promised is enormous. Facebook didn’t fail to live up to its terms of service. It didn’t fail to provide settings and promote them. It failed to understand what its users expected and how to act on those expectations.

We in the tech industry take a laissez-faire attitude toward our promises to our customers. Most EULAs say products are delivered “as-is” and make it clear they may not work. Most terms-of-service documents disclaim any responsibility for failure of the product.

That may protect your company legally. But it won’t keep customers. Remember my first rule of customer service?

“If you’re quoting your terms of service, you’re wrong.”

What you should do:

Talk to your customers. Make absolutely sure you know what they think you promised to them. Make sure they know you are, in fact, promising. Make sure there is no gap whatsoever between those understandings.

Then keep those promises. Consistently.

Because, if a Facebook-like debacle happens to you, you will probably not end up testifying before Congress. But you will almost certainly lose a significant number of customers.

To learn more about doing it the right way, check out my five-part series showing how customer trust is the key to growth.

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Decision Making

How to Prevent Your Biggest Strategy Mistake

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It seems like a pretty simple statement: Getting your strategy right is critical to getting the outcome that maximizes your marketing and business potential. Many companies, especially smaller and mid-size companies, tend to put lots of work into getting strategy right, and they often come up with all the right answers. Even so, they are missing the forest for the trees.

Getting the right strategy for your marketing and your business requires that you choose the right strategy framework for your particular situation. No-brainer? Turns out it’s not.

Here’s an example: A young software company wanted to find ways to generate substantial growth. The natural model would be to expand their offering to their market and, at the same time, expand their market. This expands the definition of their capabilities along two dimensions at the same time, significantly increasing the potential to dilute their focus and investment.

After seeking advice, they found out the approach was completely wrong. They could have developed a strong strategy addressing larger markets with more offerings, but execution would have failed. It would have been hard to tell why, since none of the assumptions would have been violated — just the desired outcomes would not have happened.

They ultimately went with a strategy based on the business book, Crossing the Chasm. Doing this required a different approach: narrowing focus on a smaller set of customers initially and then growing from there. This strategy worked, and they are now on a very rapid-growth trajectory.

Why did this choice make sense? The premise of the strategy matched their situation.

The book describes the point at which the strategy makes sense as the point at which, for tech companies, customers become less visionary and more pragmatic. This was their actual experience, but until they saw that described, they would not have seen it explicitly.

Similarly, every strategic framework I’ve worked with has a similar definition of the conditions under which the strategy should be applied. The challenge is it’s hard to find it — most strategy books and frameworks will describe in great detail how to execute the framework but spend little time describing those conditions. You really have to look and pay attention!

Whether you need to cross a chasm or find some blue ocean or move in any direction, make sure your approach suits your situation, your market, your business and your customers.

Or risk unexplained failure.

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creativity

Three Ways to Find Your Marketing Creativity Again

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It would be hard to find a marketer who would not agree that marketing has become much less creative and much more process-focused.  We tend to idealize the 1960s world, stereotyped by the television show Mad Men, where the creative team ruled the business and the great idea was the best product marketers had to offer their client or employer.  At the same time, we lament the rise of technology, complaining that marketing and sales automation has forced us into a never-ending loop of justifying our value based on whatever numbers our client or bosses choose to watch.

What Happened to Marketing Creativity?

It’s easy to blame the shift to more process-focused marketing on the rise of marketing technology and the associated capabilities of measurement.  But it’s also true that we have used technology as a crutch, a substitute for our own creativity, in order to get things done faster, or, at times, with less hard work.

Don’t get me wrong:  Automation and measurement are important to a functioning marketing team.  Without it, you can’t scale and you just don’t know what’s working and what’s not. You need automation to deliver just the right message to just the right person at just the right time and to know whether you succeeded and whether the person took the action for which you were hoping.  As marketing gets more and more personal, the need for technology to handle more tasks at a higher level of functionality will only increase.

Is marketing creativity getting lost in automation?  I don’t think so.

Creativity, though, marketing creativity is the role―and the greatest contribution―of humans in marketing (and beyond).  You can’t delegate that to an automation system.  I think it’s time for us, as marketers, to remember it is still human creativity that drives our work; our automation systems cannot be the source of our creativity but rather the tools we use to automate and scale that creativity.

Is your marketing really as creative as it could be?  Here’s an example of using technology as a substitute for marketing creativity.  See if this scenario sounds familiar:

Your digital marketing team is about to launch another email campaign (the last one worked pretty well, right?).  They decide on the new target audience.  They then look at the last campaign in your marketing automation system and copy it.  They edit the content to more closely match the new idea.  They swap out the calls-to-action with new ones (which look surprisingly similar to the old ones―with apologies to Pete Townshend).  They check it over and hit send.

This is how the vast majority of marketing is being done today.  Email campaigns are being copied.  Ads are being tweaked.  Even paid search parameters don’t really change much. It’s comfortable.  It’s easy to understand. It’s low-risk―both from an investment perspective and in how you have to explain the lower results (it was just like the last one―we thought it would work!).  We accept incremental change and incremental results, because we can understand it.  And because our marketing automation systems, which were designed to automate tasks, are being used as a substitute for creativity.

Nobody ever made a difference in any market by doing something just like what they had done before.  You can insert the Apple branding story of your choice here, because the ways they changed thinking and changed consumer preferences is exactly the point (My personal favorite story about how ads changed minds and the market is the “Reach Out and Touch Someone” campaign.).

How do we put the marketing creativity back into marketing?  It’s not easy, but it’s critical if you want to make a difference in your market, to your clients, and to your company.

Three Ideas for Putting Creativity into Your Marketing

Here are three ideas I use to get my creativity back into my marketing efforts:

1)  Kairos

Morgan McLintic, managing director for the U.S. for Lewis Global Communications wrote an interesting piece for LinkedIn, titled Why You Aren’t Creative Anymore.  He discusses the ancient Greek culture’s two different expressions for time:

Chronos, he explains, is the concept we understand as the ticking of the clock as time passes.  It’s the way time gets measured and how time passes.  It’s how we synchronize (notice the root word, chronos) to get a common understanding of when things happen.

Kairos, on the other hand, is a qualitative passage of time, similar to Csiksgentmihalyi’s concept of flow.  It’s the place where we take the time to focus and create.

McLintic argues that the endless distractions and demands prevent us from creating the space for creativity.  We are not just endlessly busy; we are distracted.  We might be with our families, but we are thinking about work.  We might be meeting with a colleague but really worried about the meeting with our CEO tomorrow.  Focus―a key element of flow―is hard to come by.  Plus, we live in a culture that values busy-ness.  We are always under pressure to appear busy, even if we are not.  That ends up creating more stress as we force busy-work on ourselves to meet the expectation we think our surroundings―especially our work environments―force upon us.

Getting that space is hard, probably harder than it’s ever been.  But it works.  Here’s how I saw that happen recently.

I was leading a messaging project for my company.  We needed to not just revise our messaging but simplify it and communicate it in a clear, simple, concise way that anyone―in our market or elsewhere―could understand.  Even if you do every day, you know this is no easy task.  I took the usual steps, interviewing lots of people, consolidating feedback, looking for common threads and so on.  When I looked at my output, I had four PowerPoint slides with messaging statements and explanations― anything but simple.

I threw it out. I found a quiet place and put on the music that, for me, tends to inspire but not distract me (Mozart’s Symphonies No. 40 and 41).  I thought.  I recalled everything every customer and prospect had said.  I wondered why they bought from us.  More importantly, I wondered what they were trying to achieve when they bought from us.  As I sat there, the image came into my head of what must be in their heads.  Then the word showed up that described it.  Then I used the word in just the right sentence.  And that was it.  I had my answer.

Now, I stop just like that for every campaign I launch.  I encourage my team to do the same.  The result is I am starting my work with creativity―the critical element of marketing success.  I’m not letting my marketing automation system be my crutch for marketing creativity; I’m doing the creative work and letting the marketing automation system do its job of automating what I created.

2)  Finding Our Inner Four-year-old

Sir Ken Robinson discusses how our schools kill creativity.  It’s worth the nearly 20 minutes to watch.

He tells this story (slightly edited for readability):

When my son, James, was four in England―actually, he was four everywhere, to be honest.  If we’re being strict about it, wherever he went, he was four that year.  He was in the Nativity play.  Do you remember the story?  No, it was big, it was a big story. Mel Gibson did the sequel; you may have seen it: “Nativity II.”

But James got the part of Joseph, which we were thrilled about.  We considered this to be one of the lead parts.   We had the place crammed full of agents in T-shirts: “James Robinson IS Joseph!”  He didn’t have to speak, but you know the bit where the three kings come in?  They come in bearing gifts, gold, frankincense, and myrrh. This really happened.  We were sitting there, and I think they just went out of sequence, because we talked to the little boy afterward and we said, “You OK with that?”  And he said, “Yeah, why? Was that wrong?”  They just switched.  The three boys came in, four-year-olds with tea towels on their heads, and they put these boxes down, and the first boy said, “I bring you gold.” And the second boy said, “I bring you myrrh.” And the third boy said, “Frank sent this.”

Kids will take a chance.  If they don’t know, they’ll have a go.  They’re not frightened of being wrong. I don’t mean to say that being wrong is the same thing as being creative.  What we do know is, if you’re not prepared to be wrong, you’ll never come up with anything original―if you’re not prepared to be wrong.  And by the time they get to be adults, most kids have lost that capacity.  They have become frightened of being wrong.  And we run our companies like this.  We stigmatize mistakes.  And we’re now running national education systems where mistakes are the worst thing you can make.  And the result is that we are educating people out of their creative capacities.

Trust me, it’s much funnier when he says it.  But he’s right.  He tells the story―now pretty much folklore in the education business:  when you ask a class of kindergartners who is an artist, pretty much everyone raises their hand.  When you ask a class of sixth-graders the same question, only one or two raise their hands.

You probably can’t go to work and act like a four-year-old.  But you can take the time and focus to let yourself play with your thoughts and ideas like you did when you were four, then take what you come up with, and put it into grown-up terms your colleagues will understand.

I can pretty much guarantee you show more marketing creativity than anyone―including you―ever expected.

3) Avoid Groupthink

This should be pretty obvious to anyone who’s ever tried to make a decision in a meeting. You know the pattern all-too-well:  Everyone speaks, carefully avoiding stating an opinion, until the boss chimes in, then everyone suddenly agrees with the boss, showing how what they already said supports their agreement.  This is not just a business phenomenon.

Brainstorming sessions are a really good way to avoid this.  But most brainstorming sessions fall prey to the exact same malady.  We are afraid to offer ideas that might seem too far away from the norm―or worse, too stupid.  We want to be seen as part of the team, and we want to be seen as intelligent.

One technique I have seen used is to let everyone do their brainstorming alone, while in a group.  In this approach, you might hand everyone slips of paper or post-it notes.  Ask everyone to write down everything they can think of, one idea per slip or post-it.  When everyone is done, collect the notes so they are not associated with any individual.  Let the group get together and look at the ideas, then start sorting them out and prioritizing.

Groupthink is a very dangerous and insidious bias that can kill any attempt to offer anything creative before it is even stated.  You probably know this intuitively.  Avoiding the fear of groupthink will let you find a way to offer your marketing creativity and maybe make a big difference in your next project.

These three suggestions are far from the only ways to reestablish marketing creativity.  I’m pretty sure you have a few other ideas (please offer them in the comments below!).

Reestablishing the role of creativity is critical to the success of your marketing efforts and to the success of your organization as a whole.  It’s time to stop letting automation drive all our thinking and let it do its job―automating the creativity humans bring to the work.

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Decision Making

How Data Can Be Dangerous: Don’t Market to the Middle

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Danger!  Your data is causing you to market to the middle of your audience and miss many opportunities.

In my recent post, I wrote about the dangers of relying solely on data to make good marketing decisions.  While data is the ultimate sanity check, data can also be easily skewed, misinterpreted and used in ways that were never intended (or worse, in ways that are meaningless).  Without good judgment and interpretation, data almost certainly will lead you astray and you could market to the middle.  But there’s a subtler danger that lies beyond just the use of data in your marketing decisions.

What if your actions as a marketer are closing off options for your customers?

What if both you and your customers would be better off with those options open?

What can we, as marketers, do about it?

Douglas Rushkoff, an NYU professor and leading thinker on the Internet and society, said in his recent book:  “Companies know things about you that you don’t yet know yourself, and they only know them in terms of probability.  The world that you see is being configured to a probable reality that you haven’t yet chosen.”  And we, fellow MENG members, are the ones doing the configuring.

We work hard to understand our audiences.  We try to decipher their behavior.  We work to develop models of their personalities and their tastes.  We try to determine what we think they are going to do next.  And then we build every experience custom-tailored to each individual, bringing them closer and closer to the next action.  And then the next.

If you look deep down inside the models that got you to “knowing” what each and every individual’s behavior is going to be, you’ll find they are all based on statistical averages. Even if you segment your audience really well, you’re still looking at statistical averages of each segment.

That works for the 68% of your audience within the first standard deviation from the mean. It skews the results for the next 27% and for the last 5%―the outliers―you just have no idea what they would have done if you didn’t pre-define their path.

Market to the Middle:  The Small Danger

You’re missing some great ideas and opportunities.

One of the tenets quoted so often is that the opportunity for innovation lies with the outliers.  It’s the customers who do the weird thing with your product or ask for something which you haven’t yet thought of who show you the way to your next big opportunity.

When you don’t let them get there by following the market to the middle, when you decide they should follow one of your home-made yellow-brick roads, you miss out on the great opportunities they bring.

This is just another way of saying you are listening to your customer too closely, and you will be disrupted by some other company that thinks about the problem differently.

But that’s just the small danger.

The Big Opportunity

Ten years ago, a small group of sales and marketing people started thinking differently about how to use all the then newly available technology to advance the field.  One of the core tenets of that group―later codified in this book and many other publications―is that companies must now learn to adapt their sales and marketing to what, where, and how customers want to buy, rather than asking customers to adapt to how the company wants to sell and market to the middle.

We’ve tried many different forms of this, but what it comes down to every single time is: we have a really hard time delivering a perfectly customized sales process, product, service, and experience to every single customer.  We’re still looking at averages.

A Short but Relevant Digression

In the old, industrial-age, grade-school classroom―the kind most of us experienced―teachers were said to be teaching to the middle, which means they were teaching to the average student in the class. That makes it very difficult for the students at the top and bottom of the class (for different reasons) to learn effectively.

I recently worked with a company that helps school districts implement personalized learning. What that means―when it’s fully working―is every single student gets exactly the right challenge, information, work, assignments, and education he or she needs at every single moment throughout his or her school career.  Sounds like a tall order, right?  It is.  It requires rethinking how education is delivered.  It redefines (and, I believe, elevates) the role of the teacher.  It changes the school from a factory, churning our identically educated kids, into a greenhouse, growing each and every unique kid in their own unique way.

Can we marketers do the same for the customer experiences we deliver?

Yes, but we have to change the way we do marketing.  It’s OK to rely on data, as long as we’re careful using it and do not always market to the middle.  But we have to start building organizations and processes in a very different way.  Can our marketing analysts turn into customer coaches?  Can our marketing leaders turn into Sherpas (with apologies to the site of the same idea)?  Can our content developers become editors?  Everything we do now would have to change.

And change is hard.

But there’s always someone ready to disrupt if we don’t.  And all the outliers, and then the 27% and, eventually, the 68%, will just go their own way―not ours―right to that disruptor.

Your Turn

I’ve attempted, in this post, to offer a glimpse into an idea I am developing in my own work.  But it’s just beginning.  Please tell us what you think in the comments or on social media, and let’s discuss how to do this.  I look forward to your contributions.

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Innovation

Three Ways Data Has Changed the CMO: Two Things to Look Out for and One Glimpse of What’s Next

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One thing most CMOs seem to agree on is that the availability of data and the ability to process it into information have dramatically shifted the role and effectiveness of marketing in an organization.  This data-centric approach to marketing has had several very positive effects on the function, including:

  • Increased accountability of marketing within an organization.
  • Increased effectiveness of programs with better targeting and knowledge of outcomes.
  • Better understanding of the contribution of marketing, resulting in more powerful CMOs.

The Impact of More and Better Data

Data cuts both ways.  It can help make decisions.  It can show you exactly what is happening in any given operation without introducing bias or opinion.  But it can also show you where you are achieving results and where you are not.  It can open a very clear window into the CMO’s performance, which allows for evaluation in ways that are far more objective than were previously possible.

Robert Carroll (@robcarroll), senior vice president of marketing for Gild, notes that just seven or eight years ago, “Marketing accountability didn’t exist.”  It’s not that there were not metrics, but it was much more difficult to establish hard-data success criteria.  With the rise of both CRM systems and marketing automation systems, the data has become available, and it can be turned into analyses that provide these criteria.

One notable way this has changed the marketing organization is in how results are measured.  With these systems and their underlying data in place, it is far easier to determine the exact outcomes of any given program, often from initial engagement all the way to closed sale.

While some organizations are still learning how to make this work for them, many marketing teams use a range of outcome measures such as engagement or conversion to determine everything from cost of sales to whether programs have targeted the right market.

This has also given rise to an opportunity to shift the way marketers operate.  The availability of hard data showing the effectiveness of specific activities and the speed with which that data becomes available allow marketers to try many different hypotheses about which specific items—such as target audiences, content pieces or messages—will be most effective in achieving any given objective.  It lets marketers do the kind of testing and retesting that makes success possible in experimental sciences (such as lab experiments) or in manufacturing design (such as rapid prototyping).

The data and systems are also helping marketers understand media in ways that our profession had only dreamed of.  We can tell exactly which media are most effective to carry our messages and reach our desired target.  Carroll notes, “Email is still the most effective media for outreach.”  But he also has seen a rise, especially with the increasing number of Millennials in both marketing organizations and as members of our target audiences, in the effectiveness of what we might call old-fashioned outreach methods.

“Most Millennials are not used to receiving a telephone call or a postal mailer,” Carroll says. “The sheer novelty of the outreach method is starting to show some unexpectedly positive results.”

While accountability and measurement, in and of themselves, are generally considered good things.  The result of this new level of accountability and the success that has accompanied means that CMOs are gaining more power in the organization.  Now that it is easier to quantify contribution, it’s also easier to show the exact effect the marketing organization has had on the overall business.

As a result, Carroll points out, “More and more, CMOs are becoming CEOs.”

In my own opinion, this also has the potential to result in organizations that are more focused on serving their markets and building better customer relationships.  It certainly will create a different kind of organization than those that followed the historical trend and were led by CFOs or operational executives.

Data Caution!

So far, it’s starting to sound like the rise of the data-based marketer has brought incredibly positive changes and garnered promotions for CMOs.  But the rise of data is also fraught with possibilities to go awry for CMOs:

  • Measurement measures failure just as effectively as it measure success.
  • Data can mislead as easily as it can reveal.

CMOs have jumped on the data bandwagon, and it is, without a doubt, changing their careers.  But where marketers were once able to explain away failure of programs with everything from rebranding to fancy footwork, the ability to look at the data can expose exactly where and why programs failed.  John Philpin, a serial CEO and author of Beyond Bridges, says “Marketers are being found out.”

Philpin also expresses an opinion common to many of us:  “Marketing is as much art as science.”  It’s hard to say that just because a program failed, and we can pinpoint the source of that failure, that the error did not lie in our approach, strategy, judgment, or other human-created idea that was an assumption of the program.

Data can also mislead.  There’s an old saying that the numbers (if you’re an accountant, or the analysis if you’re a statistician) can say whatever you want them to say.  We see this every day in social media where those with specific points of view create charts that appear to be authoritative but are clearly designed to lead the viewer to specific conclusions that benefit the creator.  This happens not just with political pundits, but with marketers as well. We would love to convince the entire world that it has the exact problem we can solve.  And then, of course, sell them the solution.

The data on which we rely for measuring our own success and for proving our success to our organization suffers from the same limitation.  It can be used to show the kind of outcomes we want to believe we have achieved and can be manipulated to hide the outcomes we know will not lead to proving our own effectiveness.

These two concerns—the exposure of failure and the inclusion of human judgment—along with the ability of data to mislead the reader show the limits of reliance on data as the sole measure of success and accountability for a CMO.  It is incumbent upon the CMO to know when data will be useful, how it is most useful, and when to rely on it as a measure of success.

What’s Next for CMOs and Data?

CMOs are seeing the opportunities brought by an increased ability to analyze data and are seeking ways to both expand data access and analysis and find more effective ways to understand and use data.

We’ve all heard about the rise of so-called big data, which Carroll calls “too buzzy” and Philpin calls “a misnomer.  Philpin goes on to add, “Big data is about the relationship among the data—not the data itself.”

Data gets “big” when there’s lots of it, notably more than traditional databases can handle. But it is just this ability to store and analyze unstructured and often unrelated data that can provide insights into our markets and our customers in ways we are only beginning to see.

Carroll sees how the mass of unrelated data Gild is pulling together has started to show them how best to reach their audience, such as where telephone and postal mail can be effective.  He also sees a bigger picture.  “Prepare to be disrupted,” he says, “and all of that data can point to a potential disruptor of your business.”  Since all businesses are potential targets of disruption, it seems like a valuable use of data.

I also agree with Philpin’s answer to my question, “Have you seen big data work in a marketing effort?”  He responded, “Squirrel!”  Staring at data for too long can distract you and lead you to conclusions that are mere mirages.  You start to see things that are just not really there.

More and better data and data analysis are critical to the future of marketing.  Even more critical, however, is the human ability to know how, when, and where to use that data.

Knowing how to turn data into useful information will become more and more important to the success of marketing organizations—and the CMO.

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Customer Trust

Are You Really Customer-Centric? Or Is It Just Talk?

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It seems every company wants to show just how customer-centric it is these days.  It’s increasingly common to hear PR machines toss around phrases such as, “We value our customers,” or “We put our customers at the center of our business.”

But it’s easier said than done.  When it comes time to make a decision that pits customer interests against a chosen corporate strategy, do you really make decisions that put your customers first?

A.P. Giannini, founder of Bank of America, said, “The purpose of a business is to create a customer.”  If, in the process of evolving your business, you choose to forsake some (or all) of your customers, you not only have no longer put customers at the center of your business but also have given up the business those customers represent.

A recent stark example of the conflict between a chosen corporate strategy and a customer-centric one is the recent decision by Starbucks to close a number of its brands, including San Francisco icon La Boulange.

La Boulange is a chain of bakery cafes in San Francisco that has a reputation for quality food at reasonable prices and has earned the trust and devotion of San Francisco Bay Area locals. This is important to this story, as earning the trust of San Franciscans, as a whole, is not easy, and locals tend to fiercely defend local brands, often at the expense of national brands.

When Starbucks acquired La Boulange in April 2013, there was a local uproar.  Would they keep the beloved cafes open?  Would we be deprived of La Boulange baked goods?  What would happen to the people working at them?

Starbucks is one of those companies that claims to employ a customer-centric business strategy.  Putting customers first means making a promise to those customers, then keeping that promise.  And, of course, not breaking it.  Starbucks made a promise. They kept that promise—until they broke that promise by making a decision that clearly put their chosen corporate strategy ahead of their customers’ wishes.

Make a promise:  At the time of the acquisition, Starbucks stated it would keep the cafes open and even offer La Boulange baked goods in its Starbucks coffee shops.

Keep a promise:  It held to this promise.  It even opened more locations of La Boulange during the two years since the acquisition.

I cannot overemphasize this point:  Starbucks made and kept a promise to the segment of consumers who value and frequent La Boulange.  San Franciscans breathed a collective sigh of baked-good-induced relief.

Break a promise:  Last week, Starbucks announced it would close all La Boulange locations by the end of September 2015.

The justification for the decision was, in Starbucks’ words, “Starbucks has determined La Boulange stores are not sustainable for the company’s long-term growth” and that the decision was made because “Starbucks continually evaluates all components of its business to confirm they are aligned with key priorities and strategies for growth, which includes the continued analysis of the store portfolio.”  Notably, the decision was not made based on profitability, as the company claims the La Boulange brand achieved 16% year-over-year growth, and industry reports show that the newly opened stores far exceeded expectations.

In a company that claims to put its customers first, what is missing from this decision is any consideration of the promise to the customers.

Which brings me to the difficult question Starbucks faced:  Do we follow our chosen corporate strategy or do we make our strategic decisions by putting our customers first?  I wonder how you or I would make the same decision.

Traditional corporate strategy says a company should choose its competencies, market, and customer segment, pursue them to the exclusion of other options, re-evaluate those choices periodically (or continually), and make adjustments.

Customer-centric strategy demands a different approach.  If the customer is truly at the center of your business, then your business must choose its competencies, approach, and services to focus on the needs (known, unknown, or even unanticipated) of the customer. This is true whether your customer is an individual consumer or another business.

Making the choice between a chosen strategy and customer-centricity is not always as stark or obvious as it is in this case.  Companies face decisions every day that pit delivering value to customers against the chosen strategy of the business.  If your company chooses the chosen strategy and moves away from the customer it created, it must either create a new customer or face the fact that it no longer has a business (at least in that segment).

Starbucks’ mission statement is “to inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.”  The core Starbucks brand will continue to do that. But the La Boulange brand did that exact same thing for a different customer in a different way (appropriate to that different customer).  Despite Starbucks’ statement that this decision was one that keeps their mission intact, it seems that the other decision (to keep La Boulange open) would have done that as well.

So, while the decision does not directly conflict with the mission statement, it does conflict with any claim of customer-centricity.

All of which presents us with a stark example of how even the best companies make difficult strategic decisions when customer interests collide with a chosen strategy.

Have you faced such a decision?  How have you handled it?

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Choosing the Right Way to be Transparent

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We hear about transparency every day. We are told that, in a world where everything is exposed in media (mostly social media), it’s far better to be transparent than to try to hide blemishes, problems and defects in the hope that they’ll go away or, at least, not be discovered until we fix them. Marketing blogs and publications are filled with disaster stories about companies that have chosen not to be transparent, and success stories of companies that have chosen transparency.

But just like in our personal lives, we have to choose the right level of transparency, and we have to choose the topics on which we will be transparent.

Here’s a great example:

In November, I wrote about Buffer, a tech start-up that put transparency on top of their values list. Not only do they talk about nearly everything internally (including personal goals, such as education and weight-loss), but they publish many of their results, such as their customer success metrics, externally for the world to see.

Since then, they have become even more transparent, releasing more and more information publicly. Two of the ways they have done this have produced very different outcomes. Let’s take a closer look.

A Transparency Tempest in a Teapot

In December, Buffer decided to make public all the salaries of all their employees, including the formulas they use to determine these salaries.

This produced a small tempest in social media: Some praised their transparency, and others chided them for releasing personal information about their employees, or for creating potential envy and dissatisfaction in their ranks.

The question I asked was this: How does this disclosure benefit the customer (or any other constituent)? The answer is simple: It doesn’t. Granted, it does no harm, but it adds no benefit either.

This is a case of transparency for transparency’s sake. Some have made the argument that disclosing this information is consistent with Buffer’s culture, so it enhances their reputation and brand. I disagree. Disclosure is a choice, and we can always find something they are not telling us (they can’t possibly think of everything!), and this choice does not add value to the most important audience of all: their customers.

A Slippery Slope

Buffer’s chief happiness officer, Carolyn Kopprasch, also publishes a monthly report on their customer success efforts. One element of this report shows how quickly Buffer responds to customer inquiries, tech-support requests and the like (they state that 85% of requests are answered in less than six hours, though they’re not quite there yet).

This does add some value to their customers (including me) in that it shows what I can expect in terms of response to my requests, as well as how well they are doing with all the issues brought to them.

To be clear, I think this disclosure is useful and valuable. But it also creates a potentially slippery slope.

Not long ago, I sent in a tech-support request and waited four days for a response. This is not typical of Buffer support nor of my experience. It left me asking about the distribution of response times. Specifically, Buffer publishes the percentage of responses in one and six hours, but how often does it take a day? Two day? Four days? Was my response in the bottom 10%? 1%? 0.001%?

Which then led to the logical next question: Since we know not all requests are of equal importance or urgency, and Buffer’s resources are limited, how do they make the triage decisions as to which requests get one-hour response times and which get four-day response times?

You can keep going, asking more and more logical questions until their entire operational plan is public.

Let’s say that Buffer chose to disclose the entire response-time distribution and the triage criteria. Where would that lead?

In our interview, Carolyn noted that most customer service and support organizations train customers to get angry. Customers learn that getting angry leads either to faster resolution or to a supervisor who has the power to resolve an issue. This is a version of gaming the system.

Buffer’s disclosure of the triage criteria most likely would cause its customers to game the system. If I knew the criteria, I would certainly try to adjust my request to get a higher position in the queue and get a faster response.

Clearly this doesn’t help Buffer or its customers; it only adds to animosity and frustration.

Let’s say they only disclosed the distribution of response times. That would create frustration on the part of customers who were in the bottom 10%, or worse, the bottom 1%. My assuming my request fell at the bottom is not nearly as bad for my relationship with Buffer as having them tell me exactly how unimportant they deemed me. We are all better off if I don’t know.

This is, then, a choice Buffer has made about how much information to disclose and where to stop disclosure. I think they have made a good choice, in that what they disclose helps customers understand their efforts better without taking away from the relationship and adding to frustration.

Is this two-faced? Yes. But not in a detrimental way.

Buffer values transparency on one hand and says it will keep increasing transparency. But it also makes choices about just how much disclosure meets their transparency value. Being transparent is an aspiration. We have yet to find out how far Buffer will go.

We expect transparency from companies. But we also expect there are boundaries, just like there are in our personal lives.

How do You Decide?

You make decisions every day on what to disclose to whom. Do we tell our customers this fact? Do we tell the world that policy?

How should you decide?

I propose there is one simple standard, embodied in these two questions: Does the disclosure add value? And if so, to whom? If it adds value for your customer, disclose.

Tell us how you’ve made your difficult disclosure decisions in the comments.

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Evolution: Demographics, Personas and the Relationship Graph

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(this is a repost of a post written by me for Nimble.)

Evolution: Demographics, Personas and the Relationship Graph

The “Social Graph” is all the rage in the social world. Ever since Facebook launched Graph Search in 2013 and the launch of OpenSocial in 2010, we’ve been talking about interesting and useful ways to use this new form of search and the data it can provide. We’re not there yet, but with the growing popularity of graph databases, the ideas behind the Social Graph are about to become very useful to sales and marketing teams.

I worked with a client last year to develop a series of marketing campaigns based on events their customers experienced. They had learned that companies bought their type of marketing automation systems soon after certain events occurred. In their case, companies tended to buy soon after receiving B-round funding. The campaigns we developed were triggered by news that some company had received B-round funding.

This was far more effective for them than the traditional demographic- or persona-based marketing, and it tells us a lot about how to look at prospects beyond fitting them into a particular description.

It also leaves out a very important part of any sales or marketing effort: relationship building. While the company was able to offer the right solution at the right time, the hard work of building a trusted relationship never happened.

So how did we get to the point where relationship-building got left out? Let’s look at the evolution for the answer:

Demographics:

Rewind half a century(!) to Don Draper’s office, circa 1965. He’s just landed a luxury car account and is recommending a targeted direct mail (state of the art!) campaign. He needs to know where to send his brilliant mail pieces, and the best tool at his disposal is demographics. So he goes to the U.S. Census Bureau and pulls personal income data by ZIP code. He sends that mail piece to everyone in every ZIP code with an average personal income above a defined threshold.

Let’s say I am lucky enough to live in that ZIP code. Am I in the market for a new luxury car? Would I consider buying one if it met certain preferences? The answer is more likely “no” than “yes.” While the effectiveness of direct mail relied on a very low percentage of success, it also wasted the vast majority of the invested resources. No marketer or salesperson really knew if I was ready to buy a new car until I showed up at a dealer.

Personas:

Fast forward 30 years to the same agency with yet another new luxury car account. Now they have lots of data at their disposal. They can create a picture of the type of person who might buy the car. It might look like this: A well-educated home-owner who travels for pleasure two or more times per year and shops at other luxury stores. Combine that with income and credit data, and you have a much-improved chance of reaching the type of person who would buy this car.

Again, let’s say I’m that person, and I receive the advertising message by mail and maybe by email or online. But I just bought a competitor’s model last year, and it’s going to be a few years until I’m ready to buy another new car.

The point of this is we can know quite a lot about out prospective buyer but still miss the two most important things:

  1. Is the prospect ready to buy?
  2. Have we established a trusting relationship that will result in the prospect buying from us?

Solution: The Relationship Graph

The timing-based marketing programs I mentioned above are a good first step toward answering the first question. As you get to know your prospects, you can get to know their buying triggers. This allows you to focus your sales and marketing efforts on those prospects who are truly ready to buy (not necessarily the same ones who said they were on your registration form).

But what about building a relationship? Just pursuing everyone who matches your target persona will not work.

We are very good at some parts of relationship-building. We know how to find common connections on social networks such as LinkedIn and how to scour social media streams to find more information about a company or individual.

Let’s go back to the Social Graph. In my personal life, I can look at Facebook and ask  interesting and useful questions. Let’s say I were looking for someone to join me at the movies this weekend. I can go to Facebook and ask, “Which of my friends lives near me and likes newly released movies?” Questions like that can help me connect with people with whom I have established relationships (or even with those I don’t) who might be willing to engage in the way I seek engagement.

What if we did this for our customers? What if I, in my consulting practice, could ask questions such as, “At what companies do I have connections who enjoy reading white papers about customer relationship management?” Then, when I write a white paper, I’d reach out to those people. And maybe I’d ask for their feedback. And maybe, if they like it, I’d ask them to tell their friends.

What if I could go further and ask, “Which connections enjoy reading CRM white papers and have recently expressed concern about their churn rates?” That’s someone I can help, and I’d want to reach out to them.

Unfortunately, much of this capability is not yet built. But the technology exists. The data exists. And, probably most importantly, your relationships exist.

And you can put the information in your organization together in a way that mirrors the Social Graph and starts to answer this kind of question. I mean the kind of question that will help you better understand your prospect and help you to add value to their business.

This is, I believe, the next step in sales and marketing evolution.

Tell me what you think it would take to put those together and start asking questions that lead to you adding value for your prospects.

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Customer Success

Four Ways for Your Customer Service Team to Make Your Customers Less Angry

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When your customers contact your customer service team, are they already angry?

Last month, I interviewed Carolyn Kopprasch, chief happiness officer at Buffer. She said:

“We live in a culture that has trained customers to start on the offensive just to get good service…Often, you don’t get to talk to a manager or someone with authority to solve your problem unless you say a curse word.”

This is, sadly, the case for many organizations.  Consider companies with which you do business in your personal or business life.  If something goes wrong and you need help, what happens?  How do you find that help?  And how do you feel by the time you call or send them an email?  I’m going to venture a guess that by the time you make that contact, you’ve tried a number of things—to no avail—and are pretty angry.

In fact, a recent report (“Duck and Cover:  More Customers Are Experiencing Rage”) on customer rage shows “customer satisfaction over a company’s ability to solve a complaint is no higher today than it was in the 1970s” and “customer dissatisfaction over complaint resolution has increased eight points in the past two years.”

This culture of anger is the result of a widely practiced approach to helping customers that is designed to lower costs for the company.  This approach is also thought to improve the speed of resolution, but it often just creates bad experiences.

The practice is one of self-help or community driven help (the latter being very common in the technology business).  Companies will try to figure out what most customers need help with and then post those issues on their websites in some form of FAQ.  The assumption is that most people will go there, find the answer, and solve their problem.  The advantage for the company is there is zero marginal cost to help each customer.

The second step of this practice is a community driven approach. The company will form some sort of online forum and allow customers to post questions and answer each other’s questions.  The underlying assumption is that someone else has had the problem before and can help solve it.

This is not a zero cost approach, as many companies also have customer service team members watching the forums, adding comments and solutions and, sometimes, looking for common problems or requests that can point to product improvements.  But it is a very low-cost approach to helping customers.  And it puts a big onus on customers to seek and provide their own support.

The next step is to contact someone at the company on a customer service team.  While a few companies don’t provide any direct contact capability, most do, either by telephone or email.

But by the time the customer reaches that point, they have probably tried to solve it through the other two methods, maybe had some unpleasant exchanges with forum members or employees, and have probably been forced to search the FAQs repeatedly to try to solve the problem on their own.

In other words, they’re angry.

Four things you can do to avoid this:

1.   Stop making it us vs. them.

When your customer contacts you and is frustrated, angry or worse, it’s your customer service team’s job to take the company’s side. However, your rep should take away the need to take sides at all. The conversation should never be about what the customer wants vs. what the company will do.

The only conversation your customer service team should have with your customer is about the result they need to achieve and how they can help the customer get there. If every interaction is not designed around that idea, your customers will see your customer service team and your company as “against” them, and they will get even angrier.

2.   Know why your customers are getting angry.

Don’t just ask. Measure. Don’t be biased by the loudest and angriest customers (perpetuating your contribution to the anger culture), but look at all your customer interactions and know why escalations happen.

Once you identify points of frustration, you can act to intervene. Depending on the issue, you can post simple solutions on your help pages or accelerate personal contact when a particular issue is raised. The better you get at directing more of your customers to their desired outcome, the happier your customers will be.

3.  Learn your customers’ interaction preferences.

Some of us like to talk through our issues with someone. Others like to do research and solve it themselves.

Do you know what your customers prefer? Are you providing it? Or are you making assumptions that result in more escalations than needed?

Talk to your colleagues in marketing, and steal one idea. Ask who is good at developing what marketing people call “personas,” and create the ones you need. Figure out how to identify what type of problem solver each customer is and what you need to deliver to have them walk away happy.

4.  Be honest.

If your customer has a problem, you have a problem. It doesn’t matter if it might be their fault. If you don’t eliminate your rep’s need to take sides and help your customer get the outcome they need, it’s going to be your problem, one way or another.

When you have a problem, admit it (“yes, I can see how the instructions are not that clear about that”). Show understanding. If it’s not your fault, help your customer get past it. If it is, be direct and just fix it.

When your customer service reps get to the point of quoting warranty limits, user agreements and company policy, you have lost — not just the conversation, but the customer — and you can kiss repeat business goodbye.

Are you already doing some of these?  Are they working?  Tell us what you think!

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Customer Success

Building an Exceptional Customer Success Culture: How Buffer Does It

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If you’re like most recurring-revenue companies, you’re not just looking for skills when you hire customer success people, you’re looking for cultural fit and that intangible-but-oh-so-important natural customer-happiness focus. If that’s the case, the person you’d want to hire is Carolyn Kopprasch (@carokopp). Sorry, she’s not available.

Carolyn is chief happiness officer at Buffer (full disclosure: I am a user of their service), a social media posting service that schedules or meters your posts (for me, it keeps me from inundating my followers). I quoted her in my previous post on customer success culture as a great example of how to get customer success right.

I had the pleasure recently of interviewing Carolyn to find out why she is so good at customer success and how she hires and trains Buffer’s people to make sure they are, as well.

If you are leading or part of a customer success team, or you want to be, there’s a lot you can learn from her.

Making empathy a part of the culture

“One aspect of Buffer’s mission is to set the bar for customer service,” Carolyn says. She adds that the definition of customer success is evolving as the company grows — and as the Happiness team doubles in size from three to six people.

I’ve had a number of interactions with Buffer, most with Carolyn herself. Her direct honesty and ability to make me feel cared for impressed me. Why is she so good at this? She points to two things:

First, she was a user of Buffer before joining the company. Having “been in [customers’] shoes and experienced their frustrations” gives her the ability not only to understand the situation, but also to know what will help this particular user get what they need.

Second, she cites empathy as critical to great customer service. “We have to be able to understand not just what the customer means, but their frustration, obstacles and needs.”

To even be considered for a job at Buffer, you have to be an established customer and be familiar with the product. When hiring, Buffer is looking for “someone who has used [Buffer], run into the little frustrations, been confused by this or that, who generally has experience using technology for a purpose and knows how joyous it can be when it’s successful and how frustrating it can be when it’s not.”

Carolyn says this ensures there is some basis for empathy in everyone they hire. This is true not only in the Happiness team, but throughout the company. The people on her team feel “privileged to be doing what we are doing and to have customers who give us the opportunity to do what we are doing.”

Buffer also puts prospective hires through what sounds like a practical exam. Candidates are given a series of actual requests from customers and asked to respond. How they approach the response is a key factor in the hiring decision.

But the culture of empathy extends beyond the walls of the company. “If you are not practicing [these values] in your everyday life, then it’s really challenging to put away your habits and just start it when you show up for work. So we do it in every area of our lives,” she says.

[Note: If this sounds like you, Carolyn is hiring. Just remember they only hire Buffer users.]

Creating a new kind of customer success culture

Buffer handles customer success differently from most organizations. “We don’t assign cases,” Carolyn explains. The team is still small enough that everyone can see all the open cases, and everyone is tasked with taking whatever action they can to help. With a team that now spans the globe, cases are often resolved overnight while the U.S.-based team is sleeping.

This makes communication important. “We have weekly meetings and an ongoing exchange of ideas” to keep that going, she says. The email threads among the Happiness team at Buffer include everything from making sure a response actually meets a customer’s need to discussing the most understandable tone and words to use in email.

Buffer does not try to scale its customer support with technology. They have made the decision not to try to push customers toward helping themselves, but rather to focus on hiring more people to respond to and support their growing customer base. They will add online help (“some people just like to figure things out for themselves” Carolyn says), but they will continue to make email support the primary way customers get the help they need.

Buffer also publishes — yes, publicly — a monthly happiness report on their blog and on Facebook. Here’s the October report (note the summary graphic at the bottom of the post). They let the entire world know just how well (or not) they are doing. It’s a manifestation of their transparency value, and it lets all their customers know they are a part of Buffer’s ongoing improvement.

Measuring customer success can be challenging. Unlike many companies, Buffer does not count the number of replies or exchanges it takes to close an issue. “We disregard replies per conversation. Most customer success teams look at this as speed to resolution, but we know that happy customers reply back and forth a few times,” Carolyn says.

Carolyn has two measures of success for her team: “First we work on the hypothesis that a faster answer leads to a happier customer. So, we track how fast we respond to the first email and get the solution started. Second, we track self-declared happiness. Every email to a customer has emoticon ratings (provided by Hively). We track how many customers are happy with our solutions. Or not.

“Customers can also add comments to their rating, which only go to the support individual who responded, not for review or to management.” This, she explains, allows the “Happiness Heroes” to learn what they have done well and what they have not.

The best possible response to being hacked

Buffer was hacked recently. Their response was impressive, fast and very revealing, and customers responded with astonishing support. I asked Carolyn how they put together an effective customer communication plan so quickly.

“There was no plan. There was no one person defining the voice. It was a natural reflex for us to tell everyone,” Carolyn says. “That was the extent of the plan. We could not have imagined it going any differently.”

Buffer posted several times per day on their blog and social media on their progress and about the resolution. Instead of one “please change your password” email, customers knew every detail of the issue and resolution, and exactly what to do about it. Look at the overwhelmingly positive and supportive response. It’s the kind of response of which most companies dream.

Changing customers’ expectations

Carolyn sees Buffer’s approach of quick and direct responses as starting to overcome a culture in which customers expect to be angry and frustrated before they even get the help they need.

“We live in a culture that has trained customers to start on the offensive just to get good service, and it’s really easy for the customer service rep to react to that,” Carolyn says. “Often, you don’t get to talk to a manager or someone with authority to solve your problem unless you say a curse word.”

Carolyn and her team are working to get better and better at providing help that takes away the customer’s frustration and, she hopes, changes the starting expectation of her customers.

It’s working

Buffer’s and Carolyn’s ideas on how to create a customer focus in the business are groundbreaking. Even for those of us who are working to disrupt the customer relationship models that have done so much damage to the tech industry over the years are moved by companies such as Buffer to rethink our assumptions. Buffer is an example of what can be done when you throw out your experience and start with a customer-focused set of assumptions.

Buffer is a young, growing company, but it’s experiencing very low churn rates (5-6% at last count). Only 2% of customers are paying for the service, but they see conversion rates increasing month-to-month (note that the Happiness team is not compensated for conversion).

I say it’s working.

What do you think?

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