About this Author
Britton Manasco specializes in customer-focused initiatives that build business credibility and strengthen sales growth. His articles have appeared in Harvard Business Review; The New York Times; Sales and Marketing Management; CIO Magazine; 1to1 Magazine; and many other media outlets.
About this Blog
This boundary spanning Industry Insider is designed to explore and assess how enterprises are capitalizing on customer insight to build powerful, profitable and enduring relationships. Customer Intelligence reveals the compelling strategies and practices behind today’s success stories – and provides a dynamic forum where thought leaders, business innovators and customer-focused executives can identify valuable opportunities. Drawing on the perspectives and experiences of leading lights in the customer intelligence community, we demonstrate how intelligent analysis and action is setting the stage for the next economy. Also, see our launch statement.
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Customer Intelligence

July 26, 2006

Analytical Competition

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Posted by Britton

One company that is actively promoting the power of analytics and intelligence is Cary, N.C.-based SAS Institute. It is now actively running a campaign, dubbed "Competing on Analytics," that features management guru Tom Davenport. The campaign is designed to entice prospects with a promise that left-brain, analytical approaches might differentiate them and drive revenue growth.

Davenport, who has been named one of the most influential consultants by Consulting Magazine, is a recognized thought leader for his work in knowledge management, business process reengineering and the economics of attention (to mention a few of his works). Now, he has turned his attention to the power of analytics as a force for competitive differentiation. In fact, Tom tells me that his recent piece on the subject in Harvard Business Review has generated more reader comments and feedback than any other article he has ever written.

One wonders whether the interest in this sphere might fade a little bit, though, now that the economy has revived. Seems like companies get most interested in number crunching during downturns, and mostly because they are weighing an M&A deal. Hopefully, such campaigns can help fuel investment in the analytical realm.

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July 25, 2006

Triple Play

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Posted by Britton

The fighting has intensified and there may be no letting up. The MIddle East? Well, yes, but also the telecom war. I've observed renewed efforts to attain subscribers as companies such as AT&T and Time Warner duke it out to sell the "triple play" of voice, video and high-speed online access.

AT&T, which has taken a thought leading role in this new era of multi-service, is even offering a "quad pack" that includes cell phone service from Cingular. AT&T has even seen profits rise 81% over the last year thanks to new telecom synergies. "Our SBC/AT&T merger integration projects are very much on plan, generating synergies and benefiting customers," said AT&T Chairman and Chief Executive Officer Edward E. Whitacre, Jr. "These results demonstrate strong momentum as we look forward to the second half of the year and completion of our pending acquisition of BellSouth."

Time Warner, meanwhile, has found that it's cable and broadband properties are just about the only thing keeping it profitable, somewhat covering over the mess that is AOL-Time Warner -- a merger that was renounced this week by AOL's founder.

What interests me about this war is that telecom companies have been notorious in recent years for failing to keep the loyalty of customers. Cable companies, of course, rarely had serious competition for television. Now, all parties are fighting to be the "one-stop shop" for your telecom needs.

You have to admit, it's an attractive concept. Who is isn't overrun and confused by their telecom bills? This move represents a real chance to cross-sell and up-sell customers. If it is managed well, the loyalty that is so critical to sustain profits may at last be attained.

This is where customer intelligence comes in. I think telecom and cable copanies must become increasingly adept at monitoring their accounts and anticipating market changes that might encourage someone to defect. Has the price of broadband fallen dramatically in the open market? Then, you should drop your rates on that one service and make sure your customers know that they were being well cared for.

In addition, I would suggest that AT&T service agents start guiding callers to web sites that let them self-configure and test out different rates for different packages. Theoretically, you can do that on your own now. But these are big ticket purchases. Consumers want some human guidance. However, the bundles that are now being configured are simply far too complex to convey or discuss on the phone. You have to see it online and see how the price changes as you play with different options.I am talking mass customization with a human touch.

Beyond that, it is critical to monitor the demographics, behaviors and stated priorities of individual customers (and families). These companies need to anticipate needs rather than merely respond to them. Customer intelligence may be the key to at last creating loyal and profitable customers.

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June 07, 2006

Kraft Crafts a Customer-Driven Innovation Plan

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Posted by Britton

Taking a page from Procter & Gamble, Kraft Foods Inc. has launched an open innovation initiative of its own and is relying on customers to help drive its new wave of success. The new program encourages customers to provide ideas for new products, which is not something the company would have done in the past. right

Kraft chief executive, Roger Deromedi, is embracing the plan. His company, which makes everything from Oreos to Miracle Whip to Macaroni and Cheese, hasn't had a product hit in a decade. Indeed, profit has dropped 24% to $2.63 billion in the past two years, and the company has announced that it will cut jobs and close plants.

While the plan is still being worked out, one element is to enable the submission of customer ideas on the company's web site and through a toll-free number. P&G's Crest SpinBrush, which also drew on customer input, was an inspiration for the move. "Who knows what we'll get?" said Mary Kay Haben, senior vice president in the Wall Street Journal. She believes that most valuable ideas will be ones that Kraft can rapidly take to market. "We love it if it's already been patented."

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May 11, 2006

Zen and the Art of US Bank

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Posted by Britton

US Bank won the 2006 SAS Enterprise Intelligence Award for capitalizing on data created by 13 million consumer-banking customers and 1 million business customers, notes David Stodder in a recent issue of Intelligent Enterprise. "Never-ending modeling and mining cycles provide critical intelligence for multiple (and multichannel) US Bank marketing campaigns," he explains. "Using the results along with SAS Interaction Management software, the bank can track customer behavior and let representatives know when to get in touch, especially if they become aware of anomalies or important status changes."

The award was presented at the recent SAS User Group International (SUGI) conference in San Francisco. "Data mining and CRM analysis professionals, as well as their direct business and IT management bosses, understand better than most the idea of information refinement cycles based on their experience with testing models," Stodder explains. "What's new is that this notion is spreading to other parts of organizations and affecting many more kinds of business computing."

As Stodder further points out, continuous improvement "is an essential component in making business process management (BPM) a success." Expect this commitment to continous improvement to continue gathering momentum in the corporate world -- just as Kaizen helped Japanese auto companies outperform Detroit and ascending the levels of the capability maturity model (CMM) has built the credibility of the Indian software and services industry.

Robert Pirsig captured the drift in his mid-1970s classic Zen and the Art of Motorcycle Maintenance. "The real train of knowledge isn't a static entity that can be stopped and subdivided," he writes. "It's always going somewhere. On a track called Quality."

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March 27, 2006

The Voice of Truth

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Posted by Britton

Marketers have learned one very important thing in recent years. What's that? Well, that buyers are liars. More to the point, buyers can't tell you the truth because the truth eludes even them. With this insight, Procter and Gamble turned the Swiffer into a phenomenally popular cleaning item. They didn't ask their customers want they wanted in a cleaning tool; they observed their behavior. right

Well, you don't just have to observe anymore. Now, you can listen. The human voice is more revealing than we ever knew.

That's what wireless services company Nextel has discovered. "A customer can say they’re satisfied with a product," says John Tidwell, director of primary market research for Nextel. "But until now, we’ve had no real way of knowing the truth."

Nextel is using Layered Voice Analysis (LVA) to analyze customerr conversations and derive key marketing insights. LVA leverages mathematical algorithms to assess voice frequencies and identify levels of stress, deception and enthusiasm. The technology, which was developed by the Israeli firm Nemesysco for security uses, promises to make important contributions to the field of customer intelligence.

What Nextel found is that the technology can be used to analyze customer responses to brand extensions and gauge levels of overall product satisfaction. One focus group recently revealed their dissatisfaction with a product through their narratives. "They could not articulate what was making them upset, so they created scenarios to help quantify their feelings," Tidwell says.

Such insights are helping Nextel refine its offerings to strengthen customer relationships. "It’s amazing marketers haven’t gotten into this in a deeper way yet," he says. "But when they do, a lot about marketing and its capacity is going to change."

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February 09, 2006

British Invasion: The Tesco Test

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Posted by Britton

Get ready for an acceleration of intelligence-driven retailing in America. Indeed, this is one area of business in which the real innovators in customer intelligence have been overseas as opposed to the U.S. Now, one key retail player -- UK-based Tesco PLC -- is coming to the states to compete against other retail powerhouses such as Wal-Mart Stores Inc. and Costco Wholesale Corp.

Tesco intends to set up shop on the U.S. West Coast in 2007 with a convenience-store format. The company intends to annually invest £250 million ($436.1 million) on its West Coast expansion. It has already entered China and other emerging markets and half its shelf space is outside the UK.

"We have been watching the U.S. market for many years, but never thought we had the right approach and format for the American consumer," Chief Executive Terry Leahy said. "We could have gone in before, but our new format is tailored to the U.S. and brings something original."

Of course, there are skeptics. UK-based J Sainsbury PLC, the U.K. supermarket group, for instance, performed miserably in the US and eventually pulled out. "Any company which tries to enter the U.S. market ends up destroying shareholder value," said a trader in a Wall Street Journal article.

But they were not the innovators in customer intelligence that Tesco has turned out to be. That could prove a serious competitive advantage. "Everyone is an important competitor and you try to respect them and learn from them, but not be the same even though we're all competing for the same dollar," Leahy said.

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December 27, 2005

Marketing Malpractice?

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Posted by Britton

"People don't want to buy a quarter-inch drill," wrote Harvard marketing professor Theodore Levitt, apprising us of our "myopia" and unleashing a whole new school of new paradigm thinking. "They want a quarter-inch hole!" Citing the old master, Clayton Christensen (of Harvard Business School), Scott Cook (of Intuit) and Taddy Hall (of the Advertising Research Foundation), encourage us to rethink marketing yet again. right

As they see it, we have become wedded to marketing dogma that revolves around demographic segmentation. We see our customers through the prisms of age, gender, race, income, geography and lifestyle. We think in terms of averages. "The problem is that customers don't conform their desires to match those of the average consumer in their demographic segment," they write in a recent piece in the Harvard Business Review called "Marketing Malpractice."

Instead, they argue we should see our customers in terms of the "jobs" they are trying to get done. "When people find themselves needing to get a job done, they essentially hire products to do that job for them. The marketer's task is therefore to understand what jobs periodically arise in customers' lives for which they might hire products the company could make. If a marketer can understand the job, design a product and associated experiences in purchase and use to do that job, and deliver it in a way that reinforces its intended use, then when customers find themselves needing to get that job done, they will hire that product."

The job, not the customer, should be the "fundamental unit of analysis for the the marketer," they contend. The authors cite Procter and Gamble's Swiffer, which was designed to do the job of cleaning floors, and Pierre Omidyar's eBay, which was designed to sell personal items. Neither solution was designed for a particular demographic or psychographic.

They speculate that marketers focus on customers for historical reasons -- harking back to a time when the overlap between customer demographics and the job itself were more closely aligned. Even Scott Cook's Intuit developed a Quicken Financial Planner product in the mid-1990s only to discover that it had enormous market share in a relatively unimpressive market (and eventually pulled it). "[W]hile the demographics suggested that lots of families needed a financial plan, constructing one actually wasn't a job that most people were trying to do," they note.

Interestingly, the authors find, "Job defined markets are generally much larger than product category-defined markets. Marketers who are stuck in the mental trap that equates market size with product categories don't understand whom they are competing against from the customer's point of view."

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Get Ready for Knowledge Process Outsourcing

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Posted by Britton

The next wave of offshore outsourcing will revolve around high-end knowledge work. It may also have important implications for companies engaged in customer analysis and intelligence initiatives.

While the first wave of outsourcing was related to manufacturing activities, the second wave information technology (ITO) and the third wave business processes (BPO), the next wave is all about "knowledge processes." Hence, the introduction of a new buzzword -- knowledge process outsourcing (KPO) -- to replace the last one, BPO. This is where outsourcing meets customer intelligence.

One recent report from a group called Global Sourcing Now contends the KPO business will grow to $17 billion by 2010. The report suggests 70 per cent of the total -- or $12 billion -- will be outsourced to India. The number of Indian jobs in the sector is expected to grow from 25,000 at present to 300,000.

KPO refers to knowledge-intensive work that involves specialized domain expertise. High value processes that fall into this realm: valuation; research; investment researches; patent filing; and legal and insurance claim analysis. That would certainly include customer analytics and related processes.

Sameer Walia, director, SmartCube, explains, "There is a vast pool of people who work for us, including MBAs, chartered accountants, economists and engineers... Those with good education and analytical abilities can look forward to a fantastic career in KPOs."

Some see KPO business in industries such as pharma, biotech, management services, financial services, technology research, engineering. But other skills that are directly relevant to those engaged in customer intelligence work have been mentioned including financial analysis, data integration, and research and analytics. Among the companies exploring this new sector: GE Capital; Accenture; Motorola; Intel; IBM; Cisco; Texas Instruments; Nokia; Astra Zeneca; and GlaxoSmithKline.

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November 27, 2005

Preventing Terror or Eroding Trust?

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Posted by Britton

With guidance from the Pentagon, the White House is exploring ways of extending the Defense Department's reach in terms of domestic intelligence gathering and analysis. The stated objective is to preempt acts of future terror as well as treason and economic espionage.

This obviously raises some concerns among civil libertarians -- and with some justification. There already is significant concern that the Patriot Act has been abused as law enforcement officials use its permissions to pursue alleged drug criminals, tax evaders and others beyond the act's original justification.

That said, it's also vital to consider the vulnerabilities that nations face as the weaponry of mass terror inevitably becomes more mobile, compact and deadly in the coming years. Given the porous borders of countries like America, one could argue that our greatest line of defense in the long term is indeed intelligence.

The key issue at present has been the move to expand a little-known DOD organization known as the Counterintelligence Field Activity, or CIFA. As the Washington Post reports:

Neither the size of its staff, said to be more than 1,000, nor its budget is public, said [Lt. Col. Chris] Conway, the Pentagon spokesman. The CIFA brochure says the agency's mission is to "transform" the way counterintelligence is done "fully utilizing 21st century tools and resources."

One CIFA activity, threat assessments, involves using "leading edge information technologies and data harvesting," according to a February 2004 Pentagon budget document. This involves "exploiting commercial data" with the help of outside contractors including White Oak Technologies Inc. of Silver Spring, and MZM Inc., a Washington-based research organization, according to the Pentagon document.

For CIFA, counterintelligence involves not just collecting data but also "conducting activities to protect DoD and the nation against espionage, other intelligence activities, sabotage, assassinations, and terrorist activities," its brochure states.

Note the interest in "commercial data." One might be led to believe that domestic intelligence organizations increasingly will pull from the same data sources that corporations now rely on to identify prospects and better understand their customers.

Clearly, the White House wants to see defense intelligence organizations obtain more leeway to gather, integrate and analyze intelligence relative to domestic threats. This suggests that current organizations such as the FBI and the Department of Homeland Security are considered to be incapable by some of effectively handling these tasks on their own.

All of which raises interesting concerns that must be weighed and considered in relation to the terror threats that loom in the future. Of data sharing legislation now making its way through Congress, Kate Martin, director of the Center for National Security Studies, says it would give the Pentagon significant access to the FBI's massive data stores, including information on citizens that are not linked to terrorist or espionage activities. The measure, she contends, "removes one of the few existing privacy protections against the creation of secret dossiers on Americans by government intelligence agencies."

Contrary to the visceral views of civil libertarians, one might reasonably accept that "dossier assembly" is an inevitable aspect of terror prevention in the post-9/11 world. The question is whether such activities will be performed in a sensible, precise and diligent fashion with strictly defined objectives (ie. prevent terrorist acts) or if they will become just another blunt instrument of law enforcement. If the latter proves to be the case, the government will not only be wasting the limited resources now devoted to pre-empting terror, it will fatally undermine the public's trust and support.

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October 30, 2005

Competing on Analytics

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Posted by Britton

Ready for the next stage in the evolution of business? Tom Davenport, director of research at Babson College and author of the new book Thinking for a Living, contends it is "competing on analytics" (COA). This is the point when data- and fact-based decisions become the primary basis of competition. right

Speaking last week at the Better Management Live conference in Las Vegas, Davenport explained that analytics enable "the optimization of key business processes" -- whether in the realm of human resources, supply chains or customer relationships. As Davenport's research suggests, such moves are proving to be a key element of competitive differentiation and market growth.

In a study of 32 enterprises, Davenport found multiple organizations that are competing on analytics at this point. Among them: Marriott; Walmart; Mars; Dell; Procter & Gamble; Progressive Insurance; Harrah's; Gallo; Capital One;; Yahoo; Google; and Verizon. He also mentions sports teams -- such as the Oakland A's, Boston Red Sox and the New England Patriots -- that are thriving on statistical modeling and analysis. This suggests that analytical leadership has the potential to transform all industries and fields of endeavor in the coming years.

Davenport offers five stages of development in this regard:

Stage 5: Clearly competing on analytics (11 of 32) ;
Stage 4: Clear intent and almost there (6 of 32);
Stage 3: Have vision, but a long way to go (7 of 32);
Stage 2: Some local, non-strategic analytical activity (6 of 32);
Stage 1: Still wrestling with the basics (2 of 32).

Finally, Davenport offers some key factors associated with competing on analytics. He points to the importance of gaining senior management commitment, engaging in sophisticated analytics (such as predictive modeling) and being able to manage business intelligence at an enterprise level.

Harrah's, whose CEO has led the charge in this direction, is a triumphant exemplar of the approach. Indeed, the gaming giant is presently working on an initiative called "Project Moonshot" that would enable it to leverage cross-property intelligence to engage in real-time service interventions. Lose a bundle on the slots or at the craps table? You can expect an attractive host or hostess (who has just been flagged electronically) to step up beside you at the moment of disappointment and offer you a gift that reflects your personal preferences -- whether it's a spa day, a golf outing or tickets to Cirque Du Soleil. Now, every loyal and profitable customer -- who happens to be carrying a trackable "Total Rewards" card -- can feel like a high roller. Welcome to the future.

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October 28, 2005

Swan Song

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Posted by Britton

You heard it here first folks (see "Roaches and Reptiles" -- written last November). After watching the PBS Frontline documentary The Persuaders (written by media theorist Doug Rushkoff), I predicted that this strange airline would soon crash and burn. Here's the story:

Delta to Eliminate Discount Carrier Song

Oct 28 10:05 AM US/Eastern

AP -- Delta Air Lines Inc., which is reorganizing under protection from the federal bankruptcy court, announced plans Friday to discontinue its discount carrier Song by May 2006 and incorporate Song's fleet into Delta's regular service. In the interim, Delta plans to include first-class service on Song's 48 planes in an attempt to make the flights more attractive to business travelers and to conform with Delta's regular service. "As Delta continues its transformation to become a more customer- focused airline, we are incorporating the best of Song into the best of Delta," said Delta CEO Gerald Grinstein in a statement. "Our new Song service will set the standard in transcontinental travel, making Delta the first choice for customers on these routes." The financially-strapped parent company also plans to convert an additional 50-plus Delta aircraft to two-class Song service and expand in-flight entertainment on Song flights. Joanne Smith, currently president of Song, has been named vice president of consumer maketing for Delta, effective immediately. Atlanta-based Delta filed for Chapter 11 bankrupcy protection from creditors in New York on Sept. 14.

Whatever the jibberish about "incorporating the best of Song into the best of Delta," this is clearly a failed experiment. The question is: What does this experiment teach us? In my opinion, it teaches us that companies cannot rely on Madison avenue to create a corporate vision. That's what seems to have happened here. We're not talking about image problems; we are talking about "the vision thing." Song never had it. And it's not something you can just outsource to "mystical branding gurus."

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October 23, 2005

For Whom the Boom Tolls

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Posted by Britton

Fascinating article last week in the New York Times Magazine about the building industry and boom through the eyes of Horsham, Penn.-based Toll Brothers -- one of the giants in the business. Money quote: "We're really a marketing company that happens to build houses." right

They even seem to resemble Dell Computer in many ways. They don't actually build anything. Physical work is subcontracted to electrical, framing, roofing, painting, masonry and plumbing companies. They don't start construction until contracts are signed and deposits are in the bank. The company also follows the "mass customization" (they prefer to call it "semi custom") principles that have made Dell so successful and profitable. Indeed, they ran the numbers back in the mid-1980s and learned that they could be much more profitable and meet 98% of customer demands by radically limiting custom options. Construction errors, delays and costs were often generated by the option process. "The more options we sold," said CFO Joel Rassman, "the less we made."

On the customer intelligence front, it seems that the insight that matters most is related to the preferences of prospective buyers in various regions and socio-economic groups -- whether it's for "stately Colonials" or "Mediterranean-style ranches." (Tolls Brothers -- which competes with other large, national builders such as Pulte, Lennar, Centex Homes, D. R. Horton and KB Home -- skews to the high end of the market). Competitive intelligence is also critical to ensure that the company is incorporating the features that other developers are having success selling. Jed Gibson, a vice president who runs Toll's architecture division, explains, "Our business model is: what's selling out there, and how can we do it better?"

Founder Bob Toll spends much of his time poring over data related to various potential property purchases. At this point, there are roughly 74 million owner-occupied homes in America. But Toll and others believe we actually may be running out of desirable land for development as today's exurbs get built out and push us farther from city centers and workplaces. Extensive building regulations, meanwhile, add costs that smaller developers can't afford to assume. The ability of big builders to understand these regulations, bear these costs and fight the fights associated with new development further strengthen their hand.

Indeed, Toll Brothers is not convinced that the boom will ever end as far as it is concerned. While it expects the market to cool down and crush some overexuberant investors, it sees 15% growth as far as the eye can see. "Why can't real estate just have a boom like every other industry?" Toll asks rhetorically. "Why do we have to have a bubble and then a pop?"

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