Blogs from The Phelon Group

Secret Sauce: Sales and Marketing working together

2007-10-15T17:42:00.000-07:00

I had the pleasure of speaking at a conference last week in Chicago and being in the presence of about 200 senior sales and marketing executives, as well as high-caliber thinkers in the area of sales impact. Rebecca Wettemann Vice President from Nucleus research and Joe Galvin from vice president from Sirius Decisions a sales research company. Great crowd--full of smart and insightful execs from top companies such as JP Morgan, American Express and GE. A lot of probing questions and good conversation. SAVO Group, a partner of the Phelon Group, and event host invited me to speak about listening to the voice of sales and the Phelon Group’s methodology. SAVO provides technical solutions for sales organizations allowing them to increase sales effectiveness through the use of a central system for enabling sales interactions. For many reasons, I believe SAVO is on the cusp of something incredible. The company has passionate and customer-centric leadership team, an innovative product that solves a real and growing set of concerns, and a renewed focus by companies on what is truly required to enable better, more value-oriented selling. At the event, I shared our method and provided the audience with best practices for how organizations should listen to Sales. For the past six years, we’ve spent a lot of time helping company’s listen to customers. In 2003 or so, we started listening to sales and applied some of the voice of customer guiding principles and concepts to listening to sales. Our experience has shown that marketing and company resources can be better utilized if the organization can make fact-based and objective decisions about what sales needs replacing assumptions and gut-feel with real data. Further, once it’s known what sales needs, that insight must be contextualized by how your target customers and prospects make buying decisions. Both of these factors help companies better understand where to point the arrow. During the presentation, there were two points that resonated with the audience and I thought I’d share here: 1. The existence and importance of two types of sales insight. Today, when most companies and marketing teams talk to sales, they are looking to inform mostly tactical decisions. Unfortunately, the questions that get asked are around a specific events or activities—let’s say what should be on the agenda for sales kickoff, requirements for a new tool or portal, what are your needs, how you use these tools, what did you think of the field marketing program that was launched, etc. These are utility insights or data. On the other hand are strategic insights which rather than gathering usage information or requirements data, treat sales people as a conduit to the marketplace. Questions become: how are customers making buying decisions, what is our competition doing to de-position us, how is our new branding campaign and messaging impacting customers, what pain are customers feeling around new regulations in their industry? To juxtapose them: strategic insights help identify and inform strategic and complex decisions the company will make or should consider about go-to-market, positioning, etc. Utility insights, where 80% of currently sales listening focuses, is oriented toward making tactical adjustments. Both sets of insight—strategic and utility—are important, but there is an important distinction both in when you gather it, how you gather it and from whom, and how that intelligence gets used. B2B Marketers especially need to be cognizant of this distinction and be sure to gather strategic insights. 2. The need for an actionable framework that aligns marketing and sales. Over the last few years, everyone from Harvard professors to frontline marketing managers has talked about the lack of sales and marketing alignment and its implications on revenue. Through our focus on customers, the disconnect is absolutely clear. Instead of blogging about it and over-analyzing about the why of misalignment, we focused our energies instead on developing a framework or tool that would help our clients address it. As you will see in the last few slides of the presentation. We’ve created a Heat Map tool that does three things: 1) represents the customer and their “needs” as an anchor point by which to align marketing and sales; 2) visually represents, in a common language, the real challenges and areas of misalignment from a seller’s perspective; and, 3) provides a sense of the specific and budget-impacting actions that can be taken to get on the same page. We invented this proprietary heat map to give companies a singular tool to see what sales needs, how customers buy and where marketing does and should invest. Working with companies to listen to sales has created opportunities for marketing and sales-supporting group to spend in areas that not only increase sales effectiveness but enhance the company’s ability to sell to customer pain and buying habits. The idea of talking to 2-3 sales people before making an important strategic investment is no longer enough. The challenges that marketing faces today in demonstrating not only to sales that it’s there in the trenches, marketing must now bubble up its impact to the CEO and CFO—tying significant investments in marketing to corporate performance and top-line results. Here is a quote from Harvard professor Benson Shapiro—Shapiro is the Malcolm P. McNair Professor of Marketing, Emeritus, at Harvard Business School. If marketing and sales do not cooperate, the company's strategy will be inconsistent and weak; and execution will be flawed and inefficient. In today's hyper-competitive world, the sales and marketing functions must yoke together at every level—from the core central concepts of the strategy to the minute details of execution. Promise Phelon Promise.Phelon @ Phelongroup.com

Are Your Customers' Purchases Having Strategic Impact?

2007-07-19T07:51:00.000-07:00

Let’s get personal

I last blogged about the most effective way to market and sell into IT, which is still through high touch methods. Coincidentally, Eric Kintz of HP blogged not so long ago about customer centricity and making the relationship personal, but I am not sure if he includes high-touch selling in his perspective. I suspect many enterprises believe they are addressing customer centricity with strategic customer programs, one-to-one ratios on account management, executive sponsor programs, client loyalty programs, etc. Customer centricity, making it personal, and high touch sales methods hopefully enable us to better understand how our customers feel and think and show that we understand their business, their challenges and how they want to be treated and sold to.

Face-to-face meetings, personalized communications, exceptional support, digitally touching the customer through support, chat, affinity groups and the like, are all good ideas but, let’s face it, none of these tactics are relevant if your customer’s purchases have no strategic impact to their business or if they perceive no impact.

So how do you ensure that your customer’s purchases are having strategic impact? By understanding how your customers create and get value from purchasing from you. Through this understanding, both parties (seller and buyer) are sure to derive the greatest value out of the relationship. THEY – superior return on their investment, competitiveness, better relationships with their customers, increased market share, productivity, increased profitability. YOU – the same. Your company becomes strategically relevant when you can effectively articulate, build and deliver to a model based on VALUE.

For IT investments in particular, all stakeholders—finance, technology, business buyers—are looking for and want to be able to distinguish and derive the maximum VALUE that your solution brings to their company. In order for you to communicate and demonstrate value, a deep understanding of the customer is needed by the entire organization (read “high-touch”, “intimate understanding”).

From there you can begin to build a Value Model, but it requires that you understand your customer at multiple layers:

The Customer’s customers layer – the individuals and organizations that buy from your customer
The Customer’s corporate value layer – the ways your customer adds value to the businesses of its customers
The Customer’s business process layer – the business functions that enable your customer to deliver value to its customers by delivering its value proposition more productively and efficiently
The Solution layer – the products, services and support that you offer to your customer so they can solve a business problem within one of its business processes
The Product layer – individual products that you offer to your customer to fill an operational need.

For more on this email Debra at debra.colombana@phelongroup.com

Debra Colombana, Vice President of Client and Market Development Debra.Colombana@phelongroup.com

Create Accountability for Voice of the Customer

2007-07-16T12:42:00.000-07:00

Our experience working with companies of all sizes and in multiple industries tells us that when companies neglect having a separate budget line for voice of the customer, when controls and methods, guiding principles and accountability are lacking, and when insights are not gathered holistically from the customers’ point of view, then money spent on gathering customer insight is a cost, not an investment. It is flushed down the proverbial drain each and every year.

See my previous blog which discussed how to retool your customer listening from the customer point of view. However, knowing how to structure your customer listening is not enough. You must have a master budget and build accountability to the budget in the areas of customer retention, repurchase, and referrability.

If you want to become a truly customer-centric company, if you want to be able to measurably tie corporate actions and decisions to customer insight and back to what matters most – investing every dime in growth and keeping your team focused on the dials that create value – you will also need to institute methods, controls and accountability around the dollars your company spends on gathering and leveraging customer insight.

Start by asking yourself, who on your management team is staying up at night when a customer defects, does not renew or only buys in piecemeal? Who’s on the frontline when a customer de-positions your company or detracts from its brand with negative word of mouth? You already know that sales to existing customers are faster and more profitable. Retained customers not only contribute to growth; they co-invent and co-innovate. Your very reputation and ability to enter accounts, let alone new markets, is contingent upon the building a foundation of credible customer advocates.

To drive the correct investment and organizational behavior, retool your budget so that there is a master line item coupled with centralized ownership for capturing voice of the customer. Make voice of the customer a corporate versus a departmentally driven mandate. The net is that if voice of the customer is to make a difference in retention, repurchase and referrability –the three essential, revenue-driving customer metrics, it needs a formal line item in the budget with executive ownership and accountability across the management chain.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

What the Tuk-tuk Business Can Teach Us About Customers

2007-07-11T10:10:00.000-07:00

Imagine this… You’re in Cambodia. It’s hot. It’s also the slow season, kind of like your end of quarter. The tourism folks are desperate; they mob you at every turn. Did I mention it’s 90 degrees and 100% humidity?

It was our second day in Pnom Penh. Leaving the Royal Palace, we’re swarmed by tuk-tuk drivers, all wearing slippers, all exhausted, all yelling some variation of “I give you cheap price!” I notice a driver who’s standing away from the pack. He’s sporting a clean vest, a tucked shirt and a huge smile. He’s also holding up two icy bottles of water.

My tall, American-looking husband is bargaining with five drivers at once. But I look at Ali. He looks at me. Then he walks over, hands me the water, smiles and bows with arms outstretched toward his wagon.

I think—assumptive close and differentiation. Very nice.

My husband follows me; we hop into the tuk-tuk and speed away. Ali says, in pretty good English, “I felt sorry for you and wanted to get you out of there.” We are glad. When we arrive at our next stop, Ali goes for the big close: “I’d like to be your driver while you are in Pnom Penh,” he says. And then he asks us for all the details about our upcoming week—where we’re going, how we’re getting to and fro, and what we’d most like to see.

He assembles a perfect itinerary, weaving in hidden spots to watch the best sunrise and sunset, and the best place to try traditional food without “cramplications,” if you know what I mean. He’s at our hotel early to pick us up EVERY day before we can even be distracted by other drivers. And when we leave, he gives us his card and thanks us for helping him get through a rough week with few tourists.

Ali won more than a sale that day—he won a loyal, committed customer who will proactively refer him to others. He also established such value throughout the trip there that we paid a premium and tipped big at the end. Although he doesn’t have a quarterly customer satisfaction survey or a CRM system to log and manage these issues, he knows how to differentiate himself and deliver value throughout our stay. And in doing so, he unknowingly implemented a set of tactics to result in retention, repurchase and referability.

The evening we left Pnom Penh for our next destination, I gave Ali’s contact information to at least 20 people who were heading in his direction. I don’t know how it went, but I’m sure at least 50% of them used Ali. And we will arrange in advance to use his services when we return again.

What one action did your company take today to ensure retention, repurchase and referability? What will you do tomorrow? If you’re not treating those three revenue-driving Rs as strategy, you’re still just one of the pack fighting the commoditization of your product or service. What Ali the Tuk-tuk driver can teach us is that winning customers is essential but keeping them with an ever-evolving value proposition—keeping them by engineering value—will keep you well poised and on the road to long lasting success.

Promise Phelon, CSO and Founder
Promise.Phelon@phelongroup.com

Become a Cultivator of Referability

2007-06-27T10:07:00.000-07:00

It’s possible you may have some frustration with your company’s customer reference program. You might feel like the program doesn’t deliver enough customer references, or you might wonder why each story takes so long to develop, or you might think the program is too slow to develop references for your hot new products. But if you’re looking to the reference program alone to solve those problems, you’re looking in the wrong place.

Fundamentally, customer reference programs harvest customer referability. That is, once a customer is happy with your products, services, and company in general and is ready to talk about that positive experience, the reference program captures information about the customer, develops deliverables, and matches the customer spokesperson with reference opportunities.

That’s an important role that delivers value to your company, but it’s also important to remember that customer reference programs don’t make the customers referable in the first place. They don’t cultivate referability, and they shouldn’t – it’s not their role, and they’re not empowered to do it. No matter how professional, efficient, or focused your reference program is, they can’t create reference customers where none exist, and they can’t single-handedly overcome the reasons customers decline reference opportunities.

If you’re frustrated that you don’t have enough reference customers, or that you don’t have the right ones, don’t blame your customer reference program. You’ll have better results if you explore what it would take to make more of the customer base referable, and see what your company can do to cultivate that state.

Whitney Wood, Director
whitney.wood@phelongroup.com

Do New Markets, New Customers, New Products Present a Challenge for Your Organization?

2007-06-21T10:00:00.001-07:00

I was recently in Singapore and met with a colleague who works for a large government agency there—one that just received a few billion (yes, billion!) dollars from Singapore’s government to roll out new programs. As we walked and talked, I asked about utilization and if their current programs were being adopted. After a long pause, I realized that tracking usage and adoption wasn’t something their team focused on. Instead, they tie success to new programs and attracting new people into them versus getting folks to maximize their use of what’s already there.

Like a lot of companies and organizations, teams tend to be intoxicated by the newest frontier. A client’s customer told me a few years ago, “Solution providers live with an eye toward the future, but we’re just trying to survive in the present.” Yes, every company needs to be forward-looking; but it’s also true that adapting to new, new, new is a challenge for most customers and their organizations.

Study re-confirms the importance of retention

A small, recent study put out by an organization called DemandGen highlighted, as we’ve said for years, that retention as a corporate strategy is essential to profitable growth—not only because retention gives you the ability to get more from existing customers, but also because it gives you and your customers a better ability to absorb change. The study, which took into account the responses of 200 sales and marketing executives, focused on the sales and marketing aspect of being “new-market focused.” Two key takeaways for you:

The majority of sales and marketing executives said that their companies’ top two growth strategies for the coming year are “new product/extensions” and “change focus on customer/segments,” at 76% and 62% respectively. This is shocking because “deepening customer relationships” and “growing existing accounts,” two of the other answers, are known to be key to rapid growth and yields but were not noted by respondents as top priorities.
Constant “innovation” is becoming hard to digest. Sales organizations, marketers and customers often are not ready to receive new products and services, new models for engagement, new… new… new…. DemandGen’s study pointed out that 58% of respondents said their greatest challenge was “implementing strategy,” while 34% said they were only somewhat prepared to deliver on their customers’ biggest demands.

Is retention in your plan for the next fiscal year?

What are you doing in your plans for the upcoming fiscal year to connect with and segment your customer base and put into place a retention strategy for your value segments? As part of your new fiscal year plan, do a simple exercise of valuing the new versus the existing base: what is the potential value of your current customers versus the value of the new market (taking into account the cost required to enter that new market or attract those new customers)? If you consistently do this exercise and implement a retention strategy as par-for-the-course, you’ll be able to better put your current versus new market opportunities into better context and capitalize on the breakthrough growth that retention as a strategy provides.

Promise Phelon, CSO and Founder
Promise.Phelon@phelongroup.com

What Las Vegas Can Teach You About Managing Customer Referability

2007-06-14T15:18:00.000-07:00

If you’ve ever walked down the strip in Las Vegas, taking in that flaunting of excess, you’ll appreciate what a feat it would be to achieve any kind of conservation goals there. Making do with less? In Vegas? That’s a tough sell. But it’s also just what Pat Mulroy, the water chief for the city, has accomplished (here’s a great story about her that aired the other day on NPR’s Morning Edition). She got big results that crossed state lines, changed the way the Colorado River is managed, and made new artificial lakes illegal in Las Vegas, to name just a few specifics.

There are a lot of tough sells in business – getting resources devoted to listening to customers, making changes to the business javascript:void(0) Publish Postin response to what you hear, creating a strategic customer reference program – and I think Pat Mulroy’s water conservation efforts hold a lesson for everyone fighting those uphill battles.

Here’s how she did it, according to Alan Feldman, vice president of the Mirage Resort: "She framed it as a business issue: 'This is a resource, this is how much we have, this is its correlation to the economy. How do we manage it to its best impact?'"

A lot of forward-thinking people find themselves frustrated by their inability to get everyone to agree on how to manage customer referability – that is, willingness to recommend your company to a colleague – “to its best impact.” You may be convinced that listening differently or better or more often to your customers is critical. You may think you listen plenty, but don’t respond well enough. But mobilizing others to action around these ideas is arguably harder than getting Vegas to conserve.

But think what you’d be able to do if you could get everyone to see customer referability as a resource, and then trace its impact. Referability may be a slightly more complex resource than water, because so many moving pieces go into creating it, but it’s a resource nonetheless. And it certainly has a powerful impact on your bottom line – the challenge is to make that connection visible. If you did, maybe you could change the way your company manages its equivalent of the Colorado River.

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Finding Your Own Sweet Spot in the Market

2007-06-08T11:30:00.000-07:00

Are you in the camp that is counting down to the release of Apple’s iPhone, or in the camp that doesn’t have June 29 marked on your calendar as a day that will go down in history? (That’s the release date, for those in the latter category.)

I’ll probably hang onto my free-with-plan Nokia handset for a while, but I’m watching with interest as this potentially game-changing gadget comes on the market. Any businessperson can identify with the anxiety Apple’s competitors in the handset market are feeling.

But a recent New York Times article quoted a competitor who make a good point about the “media-centric” iPhone: “It will hit one sweet spot, but not necessarily all of the sweet spots — we hope.” I’d tell you who he was, but he was only identified as “a director at a handset competitor who declined to be identified, saying that his company did not want to elicit comparisons with the iPhone.”

How smart, and by that I mean both what he said and his disinclination to be pigeonholed as an iPhone competitor. He gets that some potential customers want what the iPhone has to offer, but others see the value their cell phones deliver differently, and that his company should focus on what its own customers want – its own sweet spot. If his employer is truly wise, it will keep on top of how its customers define the value they seek in a very straightforward way: by asking them.

Our own Promise Phelon tells about a similar situation a recent Inc.com article. Chasing after the imagined sweet spot of innovation led one company down an expensive and unprofitable path, because its customers were after a different sweet spot of quick, predicable value. They didn’t know, because they didn’t ask.

So what’s your sweet spot? Are you letting your competitors define it, or your customers?

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Blogging at the bottom …the MOST EFFECTIVE MARKETING ACTIVITIES in IT are still high touch

2007-06-06T11:08:00.000-07:00

Last Thursday I attended SVAMA’s event on MARKETING THOUGHT – Ideas That Drive Results. Overall there were some good points and learnings to take away. While Guy Kawasaki is always great to listen to and learn from, it was the Gartner Group presentation by Robert Goodwin that resonated with me. Of course that was because his topic speaks to what the Phelon Group lives and breathes every day, Customer Buying Trends and Influence - the TOP 10 Most Effective Marketing Activities in IT. Gartner is in the process of releasing one of their studies, and Robert shared some of the insights gained from the study. So in the spirit of “Pay it Forward” (and by the way if you haven’t seen the movie, you should rent it), I share with you some of the IT buying trends that emerged:

1) The Sales channel is becoming more important in technology as buyers look to this group to help them determine the value they will receive from their purchases.

2) High touch selling is still the most effective way and preferred way that executives buy. These decision makers put Digital Media at the bottom of their list as ways they make decisions or are influenced. So much for all this blogging and webcast stuff! Gartner recommends investing in all the classic high-touch methods: sales presentation and interaction, contact management, events, the website.

3) There is a growing trend that technology solutions are now being purchased from the line of business and not purely the IT departments.

4) And on the subject of delivering technology to the marketplace, leading edge technology buyers are acquiring technology “as a service” rather than as "owners" as they have in the past.

So for those of you in the technology sector who are reading this, it may be time to check in with your customers on “How they WANT to buy” and time to get in touch with your sales people on what they need to more effectively sell.

Debra Colombana, Vice President of Client and Market Development Debra.Colombana@phelongroup.com

Mellon Investor Services Becomes Addicted to Good Profits

2007-06-04T14:10:00.000-07:00

Today, I posted a comment to Fred Reichheld's Ultimate Question blog, in response to his call for examples of companies who are kicking the bad profits habit. See his post on "HBR Highlights the Bad Profit Problem."

In response to Fred’s request, we would like to highlight how one of our clients, Mellon Investor Services, has deployed a Voice of Customer practice, built upon the Net Promoter discipline, to become addicted to good profit by transforming their client base into advocates who drive growth.

In a nutshell, Mellon needed to win new customers and grow revenue in a highly commoditized market place that was shrinking 3-5% each year. Mellon recognized that they needed insights on how they could differentiate within their market. Mellon already had systems in place which allowed them to track customer satisfaction, but their data gave them no actionable insight to be able to predict the willingness of their customers to recommend/refer or likelihood to purchase additional services. Mellon was looking for causal linkages of what drove customer behaviors beyond just the measure of satisfaction. Mellon launched an NPS initiative to help uncover the key drivers behind a customer’s willingness to recommend and its impact on profitability and growth.

To Fred’s point, Mellon could have easily explored contractual vehicles that created bad profits. Instead Mellon looked for the levers and dials they could control to create advocates to drive customer retention, repurchase and referrability. The company realigned around the Net Promoter methodology and put customer insight at the center of their decision making process and have successfully defined the actionable levers they could control to increase loyalty and drive growth. This led to many process changes within the company and like Intuit, has created an environment that enables Mellon to have more action-oriented, open conversations with their clients and thereby improving the quality of their relationships.

One of the key aspects of Mellon’s Net Promoter program was the quality of the verbatim comments that they have been gathering via NPS. They found that there was something magical about the nature of the "recommend" question that got their customers willing to offer meaningful verbatim responses to the "why did you vote that way" follow up question. With these verbatim comments in hand, Mellon formed an executive council who reviews the data from their customer listening posts on a monthly basis. This council works to identify key trends, create actions around what their customers had to say, and more importantly, closed the loop with their customers as to the actions they planned to take. As a result of this process, Mellon discovered that in a commoditized market, where "product innovation" is difficult, you can create meaningful differentiation by creating an environment where you bring your clients into the decision making process. By asking, listening and then acting they found themselves actually changing their product and services to best meet their customer’s needs—which in the mind of the customer created a customized and differentiated offering. Pure satisfaction research never created the opportunity to create the dialogue that facilitated this degree of impact. Further details of the Mellon Investor Services case study can be found at http://phelongroup.com/clients/success.htm.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

The Queen finally listens to the voices of her market

2007-05-30T10:19:00.000-07:00

This morning I was thinking about the movie, The Queen, which I watched last night for the second time. The first time I was struck by the way the movie guided my sympathies away from the increasingly wacky public to an appreciation of the private and rational motives of Elizabeth II. This time, probably because I was walking to work, I thought about the Diana debacle from a different perspective. The movie, it seems to me, could be viewed as an object lesson about long-established companies clinging to traditions that are no longer meaningful to their customers.

It isn’t really a stretch to think of the royal family as a business—perhaps the most traditional family business there is—relying as it does on the support and loyalty of the British people for its income. In this instance, the royal family business held on to the tradition of the monarch’s standard, which flies over Buckingham Palace for one reason only—to notify the people that the Queen is at home. The people, however, considered it merely a flag that should be flown at half mast for Diana. They no longer knew or cared about its original purpose. The failure of the royal family to grasp and appreciate this change created a lot of hard feelings and disaffected customers. According to the movie, one in four respondents to a poll (customer survey) was ready to give up the monarchy. That’s a lot of “detractors” in Net Promoter parlance.

Within the world of the movie, the royal family received 360 degree input, in the Voice-to-Market manner that Whitney described in her recent post (May 18). From the people of Paris who stood silently when her hearse passed. From the police chief who wanted a condolence book to help crowd control. From the growing carpet of flowers outside the palace gates. From the press. From the polls. From the Prime Minister, acting as the royal family’s business consultant. Even from Prince Charles, who seemed to get it that the monarchy had to modernize or lose support. Once Elizabeth listened, it turned out to be pretty easy to give the customers what mattered to them: a brief appearance in front of the crowd, a sympathetic public statement, and the lowering of a flag. That’s a good lesson for companies about listening to the market. While the consequences of not listening can be dire, the remedy may be a lot easier than you fear.

Nancy Heifferon, Consultant
Nancy.Heifferon@phelongroup.com

Structuring Your Customer Listening Posts

2007-05-23T15:24:00.000-07:00

Many companies launch annual or quarterly satisfaction surveys to measure their customer loyalty and satisfaction and call it a day. It is no surprise that no meaningful action comes from these sorts of satisfaction surveys.

If you truly want to uncover the levers and dials that you can control to drive customer retention, repurchase and referrability, you must restructure the way you dialog with your customers.

Customer ‘listening’ should happen when it matters to customers, not just at the usual quarterly or annual markers. We recommend launching ‘listening-posts’ across a cross-functionally defined customer lifecycle –- at specific events and at lifecycle milestones.

Using event-based listening, you query customers at various key stages of the lifecycle. For example, you might launch a listening post at the point the sale of a product or service was completed, and another 30 days after implementation. This lets you, over time, compare all customers at point ‘x’ in the lifecycle to see where problems or opportunities may lie.

Questions are limited and targeted; you know who said what and can analyze answers within an account-specific context. Instead of a sampling, which is what old survey methods deliver (and why they fail), you get a census of all your key accounts and can know immediately if something is wrong so that you can act to fix it. And, you can quickly close the loop with unhappy respondents – sometimes just a simple call lets them know you’re listening and you care about their success. The important aspect is that you must be ready to take action and close the loop. Asking for insights or feedback if you are not prepared to act on the results will only create more detractors.

This simple restructuring around listening at key stages of the customer lifecycle gives you the real insights needed to drive action that leverages stronger customer relationships and has impact on the three pillars of customer retention, repurchase and referrability.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

CEOs and customers worlds apart on service

2007-05-22T10:38:00.000-07:00

MSNBC’s Redtape Chonicles blog (“CEOs Think Customer Service is Great") stirred up a lot of disgruntled customers today, by reporting that 75% of CEOs surveyed think their companies deliver “above-average” service. Apparently CEOs live on a different planet from their customers. At The Phelon Group we believe that 90% of all company ills can be cured by listening to customers. When companies hit revenue barriers and stop growing the way they want, customers have the answers--if only companies will listen with an open mind and commit themselves to act on what they hear. Most of the hundreds of commenters to the Redtape Chronicles blog seem to consider bad service a strategic decision on the part of the companies they deal with to disrespect them. Our experience is that companies often do care--they just don’t have the discipline and systems in place to listen, identify high-impact actions, and close the communication loop with their customers. And companies we work with are often surprised at how little some of the most effective corrective actions end up costing.

Paula Stout, VP Client Services
paula.stout@phelongroup.com

Voice to Market: Listen and Be Brave

2007-05-18T09:33:00.000-07:00

Have you ever had a 360 review, in which your boss, co-workers, and direct reports all answer detailed questions about you and your job performance? I came across an old report on a 360 review as I was updating some files the other day, and if you haven’t had one, take it from me that it requires quite a bit of courage to undergo.

The experience of getting that review certainly had its tough moments, but what I learned about how I was perceived influenced my future work profoundly. From the feedback in that review, I gained the resolve to step up and offer more ideas. I learned to stop worrying about much of what had plagued me, and I stopped putting energy toward activities that no one seemed to care much about. I don’t think the promotion and greater responsibilities that followed before too long were a coincidence – I performed better because of my newfound understanding of how others saw the value I could bring to the team. Most powerful was the chance to see all the commonalities and contradictions, which combined to create a clear outline of changes I could make. But I had to be brave enough to really listen and learn.

I thought of this experience today during a meeting about a client’s success with our Voice to Market approach, the company-level equivalent of a 360 review. The client had used the insights to revamp major elements of its go-to-market strategy, with incredible results so far and more in the works. By learning where internal perceptions didn’t match how customers thought of the company and its products, the marketing team could figure out just how to change its messages and positioning and how to support the sales force with pinpoint precision.

What do you know of how you are seen by your customers, influencers, salespeople, marketers, and potential buyers? Have you asked them lately what they think of the value your company delivers, and how they want you to improve? Do you know how they view the market you operate in? What their buying behaviors are?

You may think you know what value the company delivers and how it’s perceived, because you’ve done market research and customer surveys. But think of market research as akin to a performance review – it’s one valuable view, but it’s no 360. Only when you get a multitude of perspectives do you have all the insight you need to take powerful action. And that requires gumption, because what you learn can challenge long-held assumptions and force you to make some changes that don’t feel comfortable at first. But the results are likely to be worth it. Go ahead, be brave.

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

CMO, not an endangered species YET

2007-05-16T16:12:00.000-07:00

Recent sightings of this species suggest that the CMO may be on the latest endangered list, just as the CIO was in last decade. However, if you look around, the CIO is still here, and I suspect so will be the Office of Chief Marketer. Its survival depends on what it becomes. We have all heard about how the marketing business is changing. This is NOT news. The more relevant topic is what form marketing will take in light of viral marketing, social networking, blogs, and web-based everything, and under the pressures to measure the return on marketing investment, drive revenue, and continuously align to deliver to the company’s strategic objectives.

As the CMO becomes more of a business partner to the CEO and COO, the role will need to take on that of collaborator and unifier among product management, sales, service and delivery. If you look around, new-generation marketers are going beyond what is rapidly becoming the table stakes de jour of blogs, communities, social networks, customer experience management, permission marketing and the like. The surviving CMO will use what is learned and gathered from these new forms of connecting to and with the marketplace to become a new force within the enterprise, unlocking barriers to growth in yet to be discovered ways. Furthermore the surviving CMO will interlock product management, sales, services and marketing in order to drive greater efficiencies and impact with the customer.

Who knows what the shelf life will be for methods and tools of-the-moment for the marketing organization. Clearly the fittest survivors will be those who can demonstrate their ability to deliver to strategic objectives.

Debra Colombana, Vice President of Client and Market Development
Debra.Colombana@phelongroup.com

Executive sponsor relationships: Better to settle down or play the field?

2007-05-11T12:36:00.000-07:00

I have a question for readers out there who have experience with executive sponsor programs. These programs exist to create and sustain executive dialogs leading to relationships of trust between vendor and customer that, in turn, increase the vendor’s influence as demonstrated by a growing share of the customer’s wallet.

Some account managers I know prefer to create formal one-to-one relationships by getting the customer to officially assign a counterpart to the designated executive sponsor. One of these was curious recently to know how many others in his company had taken the same approach.

Other account managers deploy a one-to-several, fluid sponsor relationship in a strategy I’ll call “A little touch of Harry in the night,” borrowing from a scene in Shakespeare’s King Henry V. In this scene, Harry (aka Henry V) circulates among the troops before battle to get a sense of their morale and commitment.

So when you have an executive sponsor with limited bandwidth, is it better to match him or her to one customer executive and build a deep relationship? Or is it better to play the field and meet as many customer executives and senior management as possible, and listen to the customer more widely?

I am collecting anecdotal perspectives and, in return, will share them.

Nancy Heifferon, Consultant
Nancy.Heifferon@phelongroup.com

The best customer success story ever!

2007-05-08T07:54:00.001-07:00

How Mercedes tapped into the old brain with Paula’s story

** Disclaimer: this blog posting is not about our own Paula Stout—she was not in an accident and drives Audis only. **

I spent some quality time on the plane last week thumbing through Fortune Magazine’s Fortune 500 Edition. On one of the first few pages was an ad for the Mercedes S-Class Sedan. It grabbed me. In 20-point type the headline read:

“If I had not been in the car I was in, I probably wouldn’t be alive … My Mercedes saved my life.”

Does it get any better than that? Whether or not you drive a Mercedes, this ad has teeth.

What’s different about this story—

No “blind” or diluted quotes
As picture and name of the customer advocate--Paula
simple to follow, uncontrived, compelling story … we can all relate
Customer commitment to, in the future, only drive Mercedes
The “success” is a story, and the story is survival!!!!!

What’s ironic about most success stories and marquee customers today is that they’re at the intersection where less-than-remarkable customer experiences and legal departments / PR teams collide. The demand for volume has lowered the bar. If you could capture your intended customer at a glance and then direct them elsewhere for the rest of the story, would you do it?

After years of our own and other industry research into how prospective buyers gather and validate vendor claims, approach the decision-making process and influence internal constituents, it’s become so, so, so clear that emotion drives. People believe their own experiences first; the experiences of others to whom they can relate are a close second. Story consumers look for the less than linear pitch. They like to choose their own adventures. If stories lack meaning, people lose interest or become overly critical.

Could Mercedes have done more?

Sure. On top of this great story is a marketing opportunity. In addition to building an integrated marketing campaign centered around Paula and her story, Mercedes could have created and directed readers to a Web site that features Notes from Paula: a destination that tells the rest of her story, chronicles how she and her husband evaluated other car makers before choosing Mercedes and shows photos of the damaged car and what Paula is driving now.

Mercedes hit me in my old brain. Great stories should engage all parts of the mind and create a believable experience—one that personalizes the person or company taking it out of the realm of concept. People may buy “concept” once; but they don’t buy it fast or repeatedly. Further, stories must touch different parts of who you are—dig down into amygdala, the old brain. Why? The old brain (or the reptilian brain) is where decisions happen; this part of the brain helped man survive since the dawn. We form deep passions and opinions here, the old brain is where decisions are made. So why is it that nearly every customer tale we hear is diluted and without real meaning?

I recently heard a colleague pitch his refurbished medical devices company. He didn’t talk about the hospitals or practices the company serves but about the cost savings and life-essential value these tools bring to saving premature children, injured athletes and our aging parents. He told three stories of how his technology saved real people’s lives in way that no other company could.

Yes, some areas of the buying process call for us to be pragmatic and consistent. But as humans we gravitate toward shiny objects and things that make us feel safe. Stories must have that heart-felt emotional quality; they must be compelling and credible and believable. Thus, stories need to be told or translated both factually and emotionally by someone who gets the psychology of buying and retention—and of loyalty and love.

Promise Phelon, CEO Founder
Promise.Phelon@phelongroup.com

Higher Revenue in Sight Across the Great Sales-Marketing Divide

2007-05-04T10:26:00.000-07:00

More than 200 people tuned into the May 3 AMA Webcast that our Paula Stout led on “Get-in-Step with Sales”: How World-Class Companies Bridge Gap Between Marketing and Sales. Paula presented some sure-fire short- and long-term actions that companies can take to stop the finger pointing and get Marketing and Sales on the same path to double-digit growth. These include

Listening to Sales through a disciplined and sustained Voice of Sales methodology
Mapping marketing efforts and content to the customer buying process so that they are aligned with Sales’ needs during the cycle
Determining the effectiveness of your marketing-sponsored activity mapped across the buying cycle using a Heat Map.

The Heat Map really resonated with listeners, generating a lot of follow up questions and interest. It shows, at a glance, all marketing activities mapped across the buying cycle to determine where marketing is being most effective in supporting sales. If you would like to discuss the effectiveness Heat Map and other ways to close the Sales-Marketing divide and drive growth, I invite you to contact Debra Colombana.

She’ll make sure you connect with the right person for a lively and productive conversation.

Nancy Heifferon, Consultant
Nancy.Heifferon@phelongroup.com

A Business Case for Net Promoter: Double-Digit Revenue Growth

2007-05-02T17:24:00.001-07:00

We recently worked with a client to develop a business case for increasing their investment spend in capturing the voice of their customer. The goal of the CMO was to drive retention and repurchase. Using the Net Promoter methodology, we were first able to identify their Promoter, Passive, and Detractor accounts. We then took this account data and correlated the financial value of each of these accounts. The results were amazing. We learned that our client’s Promoter accounts were spending, on average, two to three times more in various services categories than were Detractors.

The question quickly became what actions they could take to convert Detractors into Promoters – who are both loyal and spend more on our products and services – and what revenue growth they could expect. A study of companies in the client’s industry showed that converting detractors to promoters yielded an average of 17% annual revenue growth. Based upon this data, our client was able to assess the impact of their voice of customer program and recalibrate their investment spend in the systems and processes that would create more Promoter accounts.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

Deliver Value, Achieve Success More Notes from the Customer Reference Forum

2007-04-27T21:18:00.000-07:00

I wrote the other day (see my April 25 post) about seeing some very familiar issues coming up at the Customer Reference Forum. The top example: “How can I get sales reps to nominate their customers as references?”

My answer: “Delivering demonstrable value to your sales force.” Successful programs at the forum reinforced that solution, including two presenters. One, Stephanie Porter of Amdocs, told of a wonderful moment when an account manager emailed his peers to discuss the value the customer reference program had delivered to him and encourage them to nominate their customers and participate actively. The other, Wendy Wolfgram of Tomorrow Now, told a similar story in which her CMO asked how he could help her – he knew the program was wonderful, because she had measured her success in supporting sales, and now he wanted to know what she needed from him. Other reference program leaders I talked to there told similar stories.

Sound good? Could happen to you if you keep your focus on sales and how you can help them advance their deals and close business.

Another interesting moment at the forum came when speaker Jeremiah Owyang shared his views on how customer reference programs will evolve in response to social media. An April 25 post on his blog links to his presentation. Jeremiah had a lot of interesting things to say about how programs will change, but I question one of them. He says social media will expand the role of customer reference managers to include “turning negative references into positive references.” I think that’s off-base in some ways, but spot-on in others.

Don’t get me wrong, I absolutely think companies should take on that challenge. But turning nay-sayers into references is not a one-program job, and it requires insight and strategy that many companies lack. To do it, they need to take a holistic view of the factors that influence referability and bring all involved departments together, including sales, support, product development, consulting, pricing and contracts, and so on. Once you’re doing all of that, you’re not a customer reference manager anymore. It goes beyond expanding a role to transforming it completely.

I couldn’t agree more with Jeremiah, though, that social media provides a critical listening post for companies who want to know what their customers say about them. Tracking blogs, review sites, and other social media should have a place alongside surveys, focus groups, boards, and other feedback mechanisms. But for now, until companies evolve to the point where customer reference programs and voice of customer programs are tightly connected, don’t stick the (probably overburdened) reference program with that job without more resources and some serious executive backing.

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Simple, but Not Easy Notes from the Customer Reference Forum

2007-04-25T09:28:00.000-07:00

It’s a big crowd here at the Customer Reference Forum in Berkeley, and as usual there’s a lot of buzz in the air as customer reference professionals have the “aha!” moment of realizing that plenty of others face the same challenges they do.

For me, it’s really striking to see the same pressing questions come up year over year:

How can I get sales people to nominate their customers?
How can I meet all these demands when I’m so squeezed for money and headcount?

There are others (How do I get customers to participate in activities? How do I get them to reveal their ROI?), but the sales participation and budget questions really top the list.

There is an answer that consistently delivers results, in the form of greater sales participation and even increased program resources. It’s simple in concept, but like so many things in the business world, not necessarily easy. Ready for it? Deliver demonstrable value to your sales force.

You can break that down into a few steps: Listen carefully to find out just what “value” means to your sales force, refine your program to focus on delivering it, get buy-in from leadership to support the change, and use agreed upon measures to demonstrate your success.

You’re working in a complicated environment, and politics, workload, and corporate inertia obstruct your path. But you can cut through all that if you keep your focus on your clear and simple goal and the steps that get you there.

Whitney Wood, Senior Consultant
whitney.wood@phelongroup.com

Translating “I NEED” into INNOVATION

2007-04-24T16:43:00.000-07:00

There is a lot of talk these days about innovation being critical to the competitiveness and growth of an organization. In a 2005 study sponsored by Cisco Systems, 635 business and IT decision-makers from companies of all sizes ranked innovation as more important to their competitiveness than better education, lower wages, or reductions in corporate taxes. The world's top 1,000 corporate research and development spenders invested $384 billion in innovation in 2004, according to a survey by the consulting firm of Booz Allen Hamilton. This investment by the so-called Global Innovation 1000 represents between 80 percent and 90 percent of total R&D spending by business worldwide.

So if a company is going to invest in innovation how can it ensure that innovation is going to pay off? By making sure that the innovation is relevant and valuable to growing the business. Today, companies are looking to their suppliers and customers for new ideas or applications of their products, services or solutions. When the Council on Competitiveness asked 199 executives to identify their most frequent collaborators in innovation, suppliers and customers were cited by 78 percent and company employees by 70 percent.

So given all this hoopla about using customers and suppliers as a source for innovation, is it really just about asking what they need? Before ATMs came into our world do you think if you asked all those people standing in line at the bank what they needed, they would say an ATM? NO, of course not! What they would have said is, “more tellers. The point is that asking your customers “what they need” does not always translate into innovation. Innovation can only come from carefully listening to why your customers are dissatisfied, and then further observing and understanding how they are compensating for a void or unmet need.

Debra Colombana, Vice President of Client and Market Development
Debra.Colombana@phelongroup.com

Customer Retention Goes Amok—Business 2.0’s Dumbest Moments in Business

2007-04-19T07:41:00.000-07:00

I am one of those people who love lists, so I couldn’t resist Business 2.0’s recently published 7th annual roundup of 101 Dumbest Moments in Business . There were some doozies in 2006, but the one that sets my own teeth on edge is AOL’s “Harassment Department”—number 2 in the subcategory of the 20 Worst Moments in Customer Service.

In this PR nightmare, when AOL customer Vincent Ferrari called to cancel his membership, John the customer retention consultant pressed him for 21 minutes, even though Vincent asked 18—that’s right, 18—times to cancel. Of course, Vincent recorded the call and posted it on his blog. Now AOL limits retention offers to two per caller. This scenario is so dysfunctional it could be a sketch on the Daily Show. To be fair, it’s probably the unlucky collision of an under-trained and poorly supervised individual with a particularly provocative customer, rather than a company policy to beat customers into submission.

However, less-extreme yet-still-aggravating versions of the practice represented here are commonplace, especially in high-churn businesses like telecommunications and credit cards. I am fuming about a credit card company that offered me a lower interest rate after I wanted to cancel (because I was such a good customer) than during the years before, while I was such a good customer.) Did the company ever communicate with me before the day I called to defect? Not that I noticed.

Of course, customer retention is important—it’s one of three “Rs” that drive top-line growth, along with repurchase and referrability (which The Phelon Group helps clients to harness—see David Ambler’s post this week). But is this really the best way to go about it—trying to keep disaffected customers on board a little longer? How long do these customers stay? Do they metamorphose into the most profitable type of customers? What word-of-mouth do they spread and what affect does that have? Companies employing this practice must have run the numbers and believe the benefit is worth the risk. But in this age of social media, citizen journalists, and customer empowerment, the risk of becoming a poster-child for bad customer treatment is greater than ever.

Nancy Heifferon, Consultant
Nancy.Heifferon@phelongroup.com

How (and Why) to Retool Your Customer Listening Spend

2007-04-16T16:20:00.000-07:00

Best Practices

In my previous blog, I mentioned that many companies are swimming in meaningless customer data. This primarily stems from the fact that most companies do not have controls and methods, or guiding principles for how to capture customer insight. More to the point, most companies operate without a master budget and centralized ownership for capturing voice of the customer, resulting in fragmented data, without context, and conflicting goals and objectives. Consequently, they end up with mounds of data that is not actionable.

In order to properly capture the voice of the customer, organizationally garner actionable insights, and then leverage your customers to break through revenue barriers, we recommend you retool in the following key areas:

Create a master budget line item coupled with executive sponsorship for capturing voice of the customer. The issues uncovered by a formalized customer insight program cannot be resolved by one department alone. Executive sponsorship and a cross-functional leadership team are required. Start by creating a budget line with defined executive ownership for a formalized customer insight program.

Develop a master voice of customer plan – a master blueprint – around how to capture the voice of the customer from a 360-degree view. This master plan must include how to contextualize and structure your customer insight framework across the customer lifecycle for aligning the data, necessary corporate actions, outcomes and corresponding impact. Further, this master plan must tie back to corporate goals and objectives, take into account the cross-functional needs of the organization and be constructed to uncover the levers and dials that drive customer retention, repurchase and referrability. To do this, you must structure your customer listening system from the customer’s point of view, not departmental needs.

At the bare minimum, require an “Imperative First” for every research project. In our experience, the most meaningful research begins with statements like: “We want to find a way to improve the retention rates of customers within our healthcare segment. To do that, we’d like to understand the customer touch-points and identify the dials that have the greatest impact on loyalty and repurchase.”.

Once you have a master plan and budget in place, create ownership and accountability across the management chain for retention, repurchase and referrability—the three essential, revenue-driving customer metrics.

While this approach requires greater discipline in spending and customer management, at the end of the day, your company will have more insightful information about your customers from a 360-degree view. With that information, you’ll be able to make actionable decisions, build better and value-driven solutions, and ultimately, sustain and accelerate your company’s growth.

David Ambler, Vice President of Client Services David.Ambler@phelongroup.com

The Experience of Voice

2007-04-10T16:31:00.000-07:00

Listening to customers is one of the leading executive mandates for 2007. Various tools and methods are being used - Net Promoter initiatives, Customer Experience Management implementations, etc. The power of these programs is to give transparency to customer insight so any group, team or individual understands the pulse of the customer at any given time. While this holistic view of the customer is certainly a key benefit of VoC practice, the unification of sales, marketing and other business units is equally important and can be a significant accomplishment!

The collection of customer insight brings an organization together to address leading issues as a team – and respond to them with a single voice back to the customer. Critical for success is executive sponsorship and involvement across the organization that spends time listening and responding to the good…and the bad. The power of voice of customer programs not only gives invaluable insight into customer perception, but can also pull an organization closer together to make powerful, informed business decisions.

Kathleen McBride, Senior Consultant kathleen.mcbride@phelongroup.com