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Monthly Archives
October 29, 2004
Posted by Britton
Your F500 company in trouble? Here's what you do: Hire one of Jack Welch's disciples from General Electric. That's what supermarket chain Albertsons did and the move is paying off. Larry Johnston, CEO of Albertsons, understands the value of disciplined, intelligence-driven management. 
According to a recent piece in the Wall Street Journal, the Boise-based company precisely monitors stocking and shopping patterns in its stores. Johnston "is getting the answers through technology like the Shop 'n' Scan devices now being tested at more than 100 Albertsons stores in Chicago and the Dallas-Fort Worth region. The hand-helds, which will soon be available at stores in other cities, allow customers to tally and bag groceries as they shop, eliminating time on checkout lines. They also remind customers about items they may have forgotten. Shoppers who pick up a package of hot dogs, for example, are asked whether they also need pickles or rolls."
The executives from Albertsons can closely watch customer buying habits, which means "everything from how often shoppers buy a bottle of ketchup to what cookies or cosmetics they splurge on most. The information is used to target particular customers for promotions and to track store inventories."
Actionable intelligence, in other words, is providing new ways to drive profitable growth. "Stymied by slow growth in the economy and an inability to raise prices, Mr. Johnston and tech-savvy CEOs at other big companies are getting directly involved in figuring out ways to use technology to extract more profits from their businesses," the Journal states. "These days they are using computers as much to gather information as to improve efficiency. The data they get enable them to cement relationships with their best customers, which translates into higher revenue and profits."
Albertsons spent about $500 million on technology last year, which is expected to have important implications for the company's productivity. "We're now in a completely wireless environment," says Mr. Johnston. He explains that all store directors and department managers will soon have devices that "tell us such things as, 'in 10 minutes, the store will run out of double-AA eggs, so it's time to restock.' [W]e'll be able to replace these out-of-stock items without incurring customer dissatisfaction."
Albertsons is counting on driving greater growth and customer loyalty through such efforts. Indeed, customers who use the Shop 'n' Scan devices are purchasing twice as much on average during each store visit.
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October 25, 2004
Posted by Britton
The problem with CRM? Too much "M," contends Yankee Group CRM Program Manager Sheryl Kingstone. "It was all very management-level, it didn't go out to the employee, and the relationship was very limited, it didn't provide in-context information that would enhance the relationship."
 What's needed, she adds, is a focus on enterprisewide analytics that bring the "cross-discipline insight needed to successfully execute integrated sales, service, and marketing plans. If you don't have integrated insight, you can't answer the question of which processes [lead to] the most profitable customer."
Kingstone says companies need to get CRM out of its silos and build "key performance indicators" that revolve around customer-focused results. Companies, she adds, "are still looking at KPIs by individual silos, and sometimes even the individual silos aren't measuring the right KPIs. A sales-driven organization [may] just be looking at revenue per salesperson or ramp-up time, but do they look at the average number of calls to close a deal or the presentations per proposal? There may be some best practices, and that information needs to be fed back to marketing."
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Posted by Britton
Online retailing is in the midst of rapid advances as companies improve their ability to monitor customer behavior. "Web analytics allows retailers to predict what customers might want to buy next by looking at their past purchasing history, as well as data generated from other shoppers," according to a new piece in Business Week. "It also helps companies make important improvements in how easy their sites are to navigate and use."
Coremetrics and Omniture, for instance, are selling their hosted, site analysis services for fees ranging from $30,000 to $100,000 a year. Sportsline.com has used Omniture's SiteCatalyst to identify when customers "dropped out of signing up for its fantasy football league, allowing Sportsline to improve its process and increase the number of paying customers."
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Posted by Britton
Market research organizations must become increasingly strategic or they risk eventual irrelevance, according to a new study by Best Practices LLC.
"High-performing market research departments help senior leaders, brand heads and managers reach critical customer insights, successful new product launches, market growth opportunities and sustainable high performance." the group states. "Less distinguished market research can confuse managers, cloud decisions, hamper forceful execution and consume valuable resources. This is a central challenge for market research departments across industries and companies."
The report contends that companies are "increasingly challenged how to transform their market research departments from backward-looking support-service technicians into forward-looking valued business advisors who support growth, brand development and long-term economic health." Among its key recommendations:
==> Optimize your structure through people, process and technology systems that embrace cross-unit coordination and sharing to enhance business impact and reduce redundancy: Market research leaders engage in a balancing act among three management variables: market research group structure, market research performance processes and market research staff.
==> Build market research impact through integrated management that balances staffing objectives, product category expertise, crisp market insights and powerful influence skills: The highest performing benchmark partners have developed integrated systems that align essential management factors.
==> Manage the market research function to leverage resources, balance planned and ad hoc projects, and maintain work productivity and effectiveness: The best market research departments take a comprehensive approach to determining performance and resource needs. These organizations consider a broad spectrum of factors when assessing workload requirements and then they plan accordingly, using templates and benchmark libraries to inform their planning. They also employ project valuation processes and various tools to effectively marshal staff resources and measure how staff professionals perform on each project.
==> Develop and cultivate people so market research becomes an esteemed career track and training ground for future business leaders: Savvy market research leaders develop integrated performance management systems for both career professionals and rotational employees.
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October 14, 2004
Posted by Britton
It's not uncommon for B2B marketers to spend all their money hunting leads. But there may be another way -- a better way -- to drive growth. Rather than merely devote the entire marketing budget to the pursuit of nameless, faceless prospects, it may be time to invest more aggressively in accounts we can name and identify at the outset. That's "account-based marketing." 
"[T]he current account-based marketing movement marks the beginning of a paradigm shift in the role of business-to-business marketing," contends the ITSMA, a membership organization which helps companies market services and solutions. "It is the cutting edge of marketing practice -- a new frontier."
As Rob Leavitt, senior director of marketing and advocacy for the ITSMA, told us, "We have been following this trend for more than a year and it has clearly crossed a threshold."
In a new report on account-based marketing, the ITSMA makes the case that B2B marketers can generate superior returns by increasingly focusing their efforts on specific accounts. The group, which surveyed two dozen companies, found that three-quarters of technology service providers are realizing a return on marketing investment that is more than three times better, on average, than conventional activities.
The top reasons for account-based marketing: growing existing accounts, breaking into new accounts and enhancing the quality of existing accounts. But to perform this activity effectively companies must carefully prioritize accounts and make a disciplined commitment to account research and analysis.
"Primary and secondary research lies at the heart of the account-based marketing process," according to the report. "Frequently, services providers create in-depth profiles of target accounts, highlighting their key performance issues and the perceptions and priorities of decision makers. This material helps marketers identify the key issues facing each account, map those issues to its own portfolio, and develop customized value propositions."
In previous research work, the ITSMA pointed to Accenture as a particularly powerful example of account-based marketing in action. "The Accenture program includes an intensive research program to fully document and understand all aspects of each existing relationship, all value delivered, executive-level perceptions of Accenture and key competitors, and critical business priorities," according to the group. "Accenture then creates a global, integrated, high-level program to strengthen the relationship and develop new business opportunities."
While the ITSMA states that this approach is too resource-intensive to apply to all accounts, it does believe that account-based marketing will capture an increasing share of marketing investment in the coming years. As one executive who participated in the research stated, "We now appreciate the value of the relationships and getting the best out of our accounts."
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October 08, 2004
Posted by Britton
One key weakness of affinity or loyalty marketing programs is the inability to effectively manage customer information, according to a new piece in CMO Magazine. One company that's managing data well, however, is American Express, which is leveraging it through its credit card loyalty program to encourage behavioral change. 
AmEx's loyalty program, which was launched in 1991 as a partnership with the airlines, has become more sophisticated over the years through the addition of partnerships, particularly with hotels and vacation providers (and more recently, consumer product goods companies). Now, the company's Membership Rewards program is linked to more than 140 companies and provides a vast array of options for redeeming points.
"The genius of AmEx is how they got people to use the card at gas stations, supermarkets and hardware stores by doubling the points people get at those places," Michael Capizzi, vice president of Frequency Marketing, a loyalty marketing provider. "So it becomes their preferred method of payment. That's why AmEx is the leader."
The company succeeds by intelligently monitoring the spending habits of its cardholders and enhancing the program in relation to that knowledge. "We've found that our customers love using points as currency," says American Express spokesman Channing Barringer. "They're accruing banks of points and using them on expenses they would normally charge—everything from movie tickets and flat-screen televisions to RV rentals in New Zealand."
As a result of such efforts, average card spending is 400% higher among Rewards members than nonparticipants. "Understanding how our customers want to spend points helps us strengthen the program, which in turn helps drive spending on American Express cards," says Barringer.
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October 04, 2004
Posted by Britton
How do world-class banks generate customer insight that enables them to enhance customer experiences? Bryan Foss, Global Customer Insight Solutions Executive for IBM Banking Industry, Financial Services Sector, offers a few "best practices" that might apply to all industries. Among them:
==> Ensuring executives and non customer facing departments are in touch with the customers' perceptions: One Financial Services company provides executives with a taped summary of recent service calls to play in their car on the way to the office, a general manager elsewhere participated in a "listening-in" call center audit.
==> Use, evaluate and comment on your own company’s services, "seed" your own employees into mail, phone and other campaigns for an experience shared with your customers
==> "Close the loop" using analytics, to understand and improve the acceptance of new offers and services, supported by specific customer and employee feedback
==> Implement "touch point" research, to understand the customers perception of different offer and channel combinations – one offer may work through the branch but not on the web, at least in its current form
These respresent a few practical steps that companies can take to build customer insight and derive value from it. They certainly offer an interesting way of ensuring we are hearing the voice of the customer -- and, to a somewhat greater extent, seeing the world through the customer's eyes.
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October 01, 2004
Posted by Britton
Reading through Business Week's recent cover story on the Innovation Economy, I was pleased that "mundane advances" were given their due.
It is typical for features of this sort to merely focus on the next new thing, the killer app, the big breakthrough that will drive economic progress. In other words, we often told about the what -- whether it is occurring in biotech, energy or nanotech -- that is leading the "way to the future."
What typically gets short shrift in these pieces is the how of innovation. In fact, the most impressive gains in recent decades have probably come from innovations in process.
After all, we are in the midst of a productivity boom. Labor productivity doubled between the 1970s and the 1990s and has exceeded 4 percent since 2001.
Take IT as an example. As MIT's Eric Brynjolfsson has written: "The unsung heroes of the IT revolution have not been the microchip and the Web browser, but rather the creative, diligent, and painstaking work done by those who have been rethinking supply chains, customer service, incentive systems, product lines, and 1,001 other processes and practices affected by computers. Investments of intangible capital constitute the real source of today’s productivity growth."
While the greatest advances in process innovation have occurred in the back office and on the supply side of business to this point, expect the next wave to occur in the front office and on the demand side. Turning customer insight into action will be a central aspect of this trend. That's the way to the future that deserves more attention from business pubs and business people alike.
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