HAPPY NEW YEAR!!!

BE PREPARED BEFORE YOU LEAP!!!

Nowadays everybody is hype about the social media. Technology has evolved the way we communicate. But are we ready for this much talk about hype?

I have been working rigorously with a client recently. The client has invested heavily in the social media and internet marketing but nothing seems to go as planned. What they got are only non financial impacts (such as website visitors, click-throughs, facebook friends) but they have not got the financial impact that is needed which is the ROI and sales do not seem to increase. In addition, social media does not act like a genie who will just grant your wishes. Social media is not FREE!! It takes people, technology and time and all this are limited resources.

What I realized is that this client does not even have a proper CRM in his organization. The fundamental of a business is to know your customers well. What I am trying to say here is that by setting a proper CRM, you will be able to identify your customers and your customer needs. By identifying this, it will be easier to use social media in targeting and engaging your customers.

In this challenging business environment, the way you engage your customers will differentiate yourself from your competitors but the more critical issues are who and how do you want to engage your customers? We all know that the internet is a powerful tool and WOM is the most effective way to communicate but many of us just forgot about the fundamentals and just wanted to jump ahead of our competitors. But isn’t it important for us to build a solid base before we leap?

I have attached an article on what happened if you are not ready to engage your customers. You are able to view the whole article by clicking the link.

“In 2006, McDonald's launched its first blog, Open For Discussion, signaling a desire to engage with customers. Less than a year later, the blog was flooded with customer complaints about the company's decision to include toy Hummers in Happy Meals — and McDonald's was slow to respond. When your company decides to venture into social media — by starting a group on Facebook, launching a blog, or Twittering — be prepared to truly hear what your customers have to say, and act on it. Providing a forum for people to share opinions about your products and services is a great way to build customer relationships, but only if you're ready to engage.”

In my opinion, the traditional CRM (CRM1.0) is crucial and it should work together with CRM2.0. Try building up a solid base first by using the traditional CRM before we just jump into social media. If we are not careful enough, news that will go against us will spread much faster than news that is positive to us. I have attached the functionality of CRM1.0 as in the diagram and it should be the core/ pre-requisite before you start with CRM2.0.

It seems like this is my last blog for the year. Hopefully we are well prepared for the social media wave in 2010. See you all guys next year!!

The Social Media Buzz

Many organizations today are jumping into the bandwagon of social media as one of their marketing tools. What are these social media buzz is all about? Primarily, social media depends on both way interactions between the customers and the organization using technology. Social media can be in many forms such as forum, wikis, blogs, podcasts, etc. and some popular social media applications are facebook, twitter, wordpress, myspace, flickr, etc.

During the weekend, I came across an e-book on social media which I wish to share. Please click below to download or read the e-book.

The e-book will briefly gives a guide to marketers who are using social media as one of their marketing tools or anybody who are planning to pursue social media. It focuses on social media imperatives, social media metrics and other related issues. Hopefully in my next blog, I would continue on how we should embrace the social media/ web 2.0.

Is This The Way You Engage Your Customers!!!! – (part 2)

In my last blog, I have written on how bad a customer service can be. So to continue with this topic, I would like to write on how we can build customer satisfaction. Developing the right methods to gauge customer satisfaction for any organizations can be summarized as below:-

1. Understanding the organization’s goals, vision and mission and core competencies. These will affect the performance measures of what you are developing. For example, if your vision is to become a luxury product supplier, then your measures will focus more on quality rather than costs.

2. Understanding customer touchpoints. Customer touchpoints are those interactions a customer has before, during and after a transaction in respect to a purchase of your products/ services/ brand. These can be face-to-face contacts, receipts, offerings, websites and so on. Understanding the customer touchpoints is like mapping the customer internal processes to meet his needs or expectations anytime. Lists, improve and measure all the customers touchpoints in your departments/ personnel/ functions that will affect your customers experience.

3. Determine your customers’ needs at the touchpoints. Below table shows some examples of customers’ needs. List and see what is relevant to your business and customize the performance measurements which may impact your customers’ satisfaction. For example, if you’re a retailer and the availability of your products is critical for your outlet, ensure that your stocks are replenished more frequently to avoid out of stock situations for your customers.

Performance measures on customer satisfaction may vary from one business to another. However, it is crucial to align the measures to the organization’s business objectives and relate them to financial performance. Some performance measurements that we should not neglect are as below:-

1. Level of customer satisfaction
2. Customer retention
3. Customer purchasing behavior (volume and frequency)

From these measurements, the development of a customer-centric organization can be clearly defined and the above will give you a rough guide to improve customer satisfaction.

Customer Experience- Is This The Way You Engage Your Customers!!!!

I had read this blog by the Sales Ninja in regards of sales and customer service and would also like it to be the topic of latest blog. I guess many of us have experienced these scenarios and it really disgusts us with the sort of service we get. I would like to share the experience that my wife and I had gone through last week that really frustrated her.

But first, I would like to share an excerpt from the Sales Ninja blog on his experience in a branded outlet:-

Now, let’s talk about Armani, one of my favorite designer labels. I was in KLCC (a high end s.h.o.p.p.i.n.g. m.a.l.l in Kuala Lumpur), walked into Emporio Armani to get some clothes. You may or may not know, Emporio Armani is very expensive! That day, I bought about $3,000 worth of clothes.

As I was paying, I was waiting for some super service lines that this super expensive store will give me.

Know what I got? “Thank you, please come again.”

What the…?? Can’t you see my name written on my credit card? Can’t you ‘customized’ your canned speech to, “Thank you Mr. Hanzo for s.h.o.p.p.i.n.g. at Emporio Armani, the choice you made with the fine shirt and Armani Jeans is fantastic, you look absolutely great in them. (or whatever ego brushing script) Please come again.”

This is what I meant SERVICE that sucks…… It is true what the sales Ninja has wrote. By just quoting your customer’s name (which is already written in his credit card), you have already engaged the customer to another level. You have made your customers feel different, closer and appreciated and he will definitely leave the outlet with a smile. Everybody likes to be called by name. Isn’t this what we want to offer to our customers: enhance the customer experience?

Now this is what happened when my wife and I visited Wong Kok Char Chan Teng in Sunway Pyramid last week. We have a voucher with us that provided us either a free drink or some sandwiches. So we decided to go there and have a drink and my wife just needed to order another one for her. To our surprise, the waitress told us that we need to spend at least RM10 in a single receipt before we were entitled to use the voucher. After hearing this, my wife was very unhappy and felt cheated because there are no such terms and conditions in the voucher.

I do understand her reaction. It was not because of the price issue that provoked her. She just felt she was being cheated by the voucher and the coffee shop. When my wife asked the manager why didn’t the terms and conditions stated in the voucher, he just told her that it was a printing error and the management’s decision to apply the terms on the voucher. Then he just told us to file a complaint to the HQ if we wanted to.

It was an unbelievable experience. Is this the way of a big chain of restaurants engaged their customers? The way you communicate and engaged your customers really reflects the identity of the company. As an established group, you need to ensure that all customer touchpoints are properly managed, and be ascertained to improve your customer experience to align to your brand promise.

All marketing materials should be checked thoroughly before sending out to your customers. What you communicate with your customers is the promise that you need to fulfill. By giving out misleading information will leave a bad experience to your customers and gives a negative perception of your brand.

Even your error is out in the market, please admit your mistakes. Inform your customers. Like in this case, write an email or sms to inform your customers. Or maybe even a notice at the entrance of the restaurant. Your customers will be forgiving enough if you admit your error. Don’t let your customers find out themselves and make your customers puke and leave a bad taste in their mouth.

Lets Get Back To Basics

With the volatility of the market and the challenges that we are currently facing, sometimes we really need to take a look at some basics to prevent sales from dipping further. Below are some steps that we might be able to use in increasing marketing effectiveness during these challenging times.

1. Check Your Product and Service Mix
Talk to your customers. Find out how you can provide more value to your customers. How can you meet smaller clients demand or customers with a lower budget? Your customers are more willing to tell you what the market needs.

2. Audit Your Brand
How your customers see your products or services reflects your company. A consistent experience, a single ‘voice’ and the ways you communicate your brand is critical. Improve it and protect it.

3. Enhance The Customer Experience
It is always more expensive to acquire a new customer than get more business from the existing customer. Each customer you lose, you are drying up your own pocket over time. Enhance your customer experience and improve your customer touchpoints to increase awareness, acquisition, loyalty and retention.

4. Look Into Your Database
Your database is like a gold mine. Capitalize and use it. Reactivate your dormant customers with new promotions, products and services. Call up your current customers for referrals. They will be happy to pass you referrals if they are comfortable with you.

5. Gain More By Using Customer Insights
The more you know about your customers, the more predictive you can be. You can accurately target your brand and marketing to meet the specific needs of your customers. Your customers’ voice, your reputation online will all lead you to a better understanding and act accordingly with ease and speed.

6. Control Your Cost
Not to reduce cost but use it wisely. Ensure that your budget is used wisely with greater value for every dollar spent in your marketing activities. Always relate it to marketing ROI and cost control to ensure that the marketing investments bring the greatest revenue.

7. Marketing Measurements
What you can measure, can be improved. Many marketers are unable to ascertain whether their marketing efforts work. Smart marketers will combine science and art to ensure marketing effectiveness. Always measure the outcome to ensure your marketing investments give you the greatest return.

Customer Database: A Priceless Asset

Innovation has played a vital role in many years for the success of an organization. However in the present state, reports have shown that more than 80% of new products brought into the market are destined to fail. This shows that innovation is fleeting and capturing competitive advantage is getting tougher. No matter what innovative products your organization sells today will most likely be a commodity tomorrow.

Organizations today need to go beyond the traditional innovation process. Other than product or service innovation, customer innovation also plays a very important role. How does an organization achieve customer innovation? It derived from DATA and customer insights. Lots of organizations either don’t keep customer data or keeping loads of it.

Most organizations with plenty of data don’t know how to take the advantage of the insights and analysis it can offer. Innovative ways of using customer insights will enable organization to maximize the value of each customer interactions by delivering a great customer experience.

Below is an excerpt from the Sales Ninja blog regarding customer database which I fully agreed upon which I would like to share:

Retail is a highly competitive business. Traffic to the store is one of the primary sources of business. Most leads are generated through walk-ins – either from passer-bys, advertisements or from referrals.

Typically, food businesses thrive thanks to referrals.Whenever a colleague or associate plans a lunch treat for us, often enough, they already have a r.e.s.t.a.u.r.a.n.t in mind. As a restaurateur, the one million question is how can we stay in people’s mind so they will remember our eatery as THE right place to dine.

A prominently-placed advertisement shows up in the newspapers one day. Obviously, not everyone would be attracted to the ad, prompting the question, “how can retailers get to the top of the mind of shoppers” so they would not leave empty-handed whenever they v.i.s.i.t an outlet or even if they do, they are likely to return in the near future to make a p.u.r.c.h.a.s.e.

Many retailers make the mistake of failing to apply this one very powerful strategy – they fail to collect personal details of their visitors or customer for their database.

Grave mistake. Everyone who walks to our store is a potential buyer. Something must have attracted them to walk in. A lady shopper may like our coffee mug but it may be too pricey to her budget at that particular moment. So she puts her buying decision on hold.

Retailers have to remember that people b.u.y on emotions and back their decision with logic. In the context of the lady shopper, she may have the desire to come back but may not remember this anymore upon leaving the store due to her many commitments.

As such, if we keep details of this shopper in our database and put her in our mailing list where we can periodically but consistently mail her our new arrivals via e-mail, postcards, SMS or newsletters, then we would have “entered her world”.

You can view the whole blog by visiting the Sales Ninja. From the above, we could see that by having a proper customer database, organizations can strategize by using customer insights such as descriptive, behavioral, interaction, etc. and thus innovate at touchpoints across the customer lifecycle to enhance the customer experience.

The Approach On The New World Customers

In today’s vulnerable and competitive market conditions, capturing customers has been very challenging and has been one of the major focuses for all businesses. This is because customers have raised their expectations due to the easy access of information and customer loyalty is falling rapidly. These customers have grown with technology and they demand more offerings and experiences that a business has to offer.

With all these challenges, organizations really face a formidable task to cope with the ever changing consumer landscape. In a hyper-competitive market, competitive advantages don't last for very long and innovation is fleeting. The ease of entry by competitors, substitutes and matching products that will disintegrate your competitive edge, or customers move on to your competitors, or even the environment changes in such a way that the advantage becomes irrelevant. How can these businesses face these complexities and volatility of the market? How can they acquire and retain the best customers in this new world?

That is the reason why the brand and the customer experience should be closely knitted and a deeper understanding of what customer wants, needs, perception and options is crucial to drive more right customers closer to your organization. Organizations that perform will be those maintaining a strong customer-centric focus while dealing with these complexities of customers and the market. It is an approach to doing business in which a company focuses a positive customer experience. Organizations need to identify what makes for a delightful customer experience, and coordinate their interactions, touchpoints, procedures, and systems to support that.

Below are some steps that can be looked into to allow organizations to be customer-centric:-

1. Knowing your customers
Performance driven businesses always try to have a deeper understanding of their customers. They used fact based information and analytics as well as customer data covering all aspects of their customers such as what they value, how they behave, etc.

2. Reaching the customers
In-depth knowledge of your customers from customer-centric programmes will enable the organizations to put up an effective marketing strategy to reach their customers with the right message at the right time.

3. Exploring the alternative media
Be innovative with new channels such as Web 2.0 and the social media to interact with your customers. This has become increasingly important with the emergence of the Web 2.0 customers. However, organizations need to be ascertained that the core competencies of the organization is uphold.

4. Effective interactions using analytics
Use a scientific approach in driving interactions with your customers through various channels. Analytics can be very useful in identifying your customers’ needs, behaviour and how to engage them. What can be measured and monitored can be improved!

5. The customer experience management
Pricing is no longer the main reason for customer churn. The way how your organization engages the customers, is to deliver a unique customer experience which is relevant to satisfying your customer’s needs and your brand promise. These also will eventually lead to customer loyalty.

With a customer-centric approach, successful organizations will always interact with their customers and seek to understand their needs and behavior. From here, value will be offered to the customers without forsaking the differentiated customer experience.

Designing an ‘Effective Marketing Strategy’

Everyone and anyone nowadays hype about putting in place an ‘effective marketing strategy’. These three words are so clichéd and overused that whenever I hear them, I will start to shiver. I frequently find myself rolling on the floor laughing my heart out when I hear or read about the ‘effective marketing strategies’ that some of the companies put out into the market.

Hello! Effective marketing strategy? It’s easier said than done. Just because you put out an expensive TV ad does not mean it’s an effective marketing strategy. Just because you spent RM1 million in print advertising in some fancy magazine does not mean you have an effective marketing strategy. Or just because you employ some young, pretty girls to pass out brochures and pamphlets in some overcrowded mall is not an effective marketing strategy.

If it’s not effective marketing strategy, then what are these? I call them money-wasting marketing strategies. TV ad? No one remembers unless your ad shocks the pants off the people who watch it. Print ad? It’ll end up wrapping nasi lemak. Young, pretty girls? The guys will look more at the girls than your products while they disgust your female customers.

As I came across Olivier Blanchard’s blog:-

“Most business leaders simply have no faith in Marketing. They don’t see it as an effective business function, they see it as an expense rather than an investment, and more often than not, marketing takes on the form of a formulaic, uninspired afterthought that barely ever ventures beyond the stale world of “marketing deliverables” like brochures, websites, mailers, press releases and print ads. Worse yet, these deliverables are often utterly ineffective in both design and purpose, adding insult to injury in the world of pragmatic, no-nonsense business execs. This is not good, and it needs to start changing immediately”

The fact is you don’t need an effective marketing strategy, you need a successful one. So what are the factors that make a marketing plan successful? Here are some key factors to ponder:

1. Your brand

Understand how your brand is unique in the market compared to your competitors. If you don’t have a unique distinction, go back and figure one out. A unique distinction can be a succinct brand promise you make and consistently deliver to your customers.

Once you’ve got your unique distinction, use it as a filter to choose and develop your marketing tactics.

As Seth Godin wrote:

“As soon as they start using the tactics of the other guys, playing the game they play, they become them. As soon as they decide that they can buy (not earn) attention, it all changes.”

2. Your customers

Understand who your customers are. And this goes beyond demographics. Find out their inimitable behaviour patterns, lifestyle and what you are really selling them. Find out why it matters to them?

But how do I find out? Customers’ touchpoints. Design your touchpoints to engage your customers. Be personal and yet professional. Contrary to what you may believe, your customers actually love to talk. They love to tell you who they are, what they like about you and how they’re making their buying decisions. They are also telling you what their frustrations, their disappointments and their expectations. All you have to do is keep your radar always on and listen.

3. Measure

Measuring your marketing efforts is important. You won’t know what is working and what’s not if you don’t measure. Here’s some of the metrics that you should considered.

Research the cost to acquire a customer in each channel. Find out the life time value of a customer in each channel. Determine which channels you should focus on.

Also, calculate the retention rates by channels. Decide where overall retention and reactivation initiatives must be concentrated on.

Adapt a kaizen mentality. Try to improve slightly every metric you are monitoring with every marketing plan you put into action. A little improvement every now and then goes a long way.

4. Religiously follow up

Effecting change to marketing plans requires discipline and a clear strategy complete with directives, priorities, deadlines and a detailed picture of what the “end game” looks like.

In summary an effective marketing strategy is to able to increase your customer base, increase their lifetime value and engage them to be your repeat customers and brand ambassadors.

CRM - How to make it works?

In my last article, I wrote about how CRM is generally misunderstood in Malaysia and went on to state the CRM is in fact a business strategy, not a mere business tool.

But what must a company who wants to adopt CRM strategy do to achieve success?

I offer below some tips for you:

1. Be committed. Management and employee buy-in is important to ensure that your CRM strategy is a success. Those who are driving the adoption should hold multiple workshops for both frontline and back office personnel to prepare them for the changes that will come with the implementation of a CRM approach as well as manage their expectations. It is also a good idea to gather suggestions from your employees and implement those that make business sense. A sense of personal involvement in the project will get your employees to work towards a successful execution.

2. Plan carefully, implement slowly. Like I said in my last article, CRM strategy is simple but not easy. Therefore, plan your CRM implementation accordingly. Know which modules are important to you and do those first. Grow your CRM strategy by phase. It’s critical that you successfully reach a few easy milestones first to gain momentum and enthusiasm. Going big bang may be too much for you and your employee resulting in frustrations and jeopardize the entire project. It's like trying to solve a jigsaw puzzle!

3. Be patient. Investing in CRM is not like investing in a stock market. You don’t get to see the results of your investment in real time very soon after you’ve invested. Identify a few KPIs that are important to you and monitor them over the next few months after implementation. If you don’t see any improvement or if improvements don’t meet your expectations, study what went wrong, refine your processes and try again.

4. Get suitable technology. Some companies try to adopt a CRM strategy by maintaining important data in Excel or Word while others download free CRM software from the internet. This could work if you are a small company. But I would recommend that you purchase or subscribe to suitable CRM technology that will meet your business needs

5. Focus on the goal. It’s easy to get distracted with your own personal wants and needs when implementing CRM. It’s important that everyone is focused on why you’re is investing in CRM in the first place; and that is to enhance customer satisfaction, increase sales and profits while building positive branding for your company. Every decision you make in your CRM should move you closer to your goal.

6. Align everything. As I’ve said (again and again), CRM is not about buying software. You will need to review and change certain ways of doing things in the past that no longer is required or effective in a CRM environment. It’s essential that you and your project team understand your business and processes well. Align these processes to fit your new strategy. But the thing to remember is that, CRM technology does not alleviate your salespeople from their job. They still need to go out there and engage the customers. They still need to add the human touch in the relationship and not rely on blasting generic emails and SMS. The key sales processes must still be intact.

What The Hell is CRM???

What the hell is CRM? When I speak to my clients, I realized that many marketers still consider CRM as a tool; a computer software. Those who have the privilege of working with CRM technology use it as an address book where they go to retrieve customer contacts or as a library to check past customer transactions. Some who are a little bit more adventurous use CRM for keying in sales orders, track sales performances and perform some ‘advanced’ marketing initiatives like email or SMS marketing.

It’s no wonder that many of Malaysia’s emerging businesses perceive investments in CRM as a waste of money. Because of poor marketers who don’t understand what CRM is and how to maximize the value they get from it, many CEOs and business owners don’t appreciate CRM and consider CRM tools as being white elephants.

CEOs, business owners and marketers in Malaysia must realize that CRM is not just another hype-up product. CRM is a business strategy. And like all effective business strategies, it is an amalgamation of people, processes and technology.

CRM owners must understand that a CRM strategy is simple but not easy. It will need time to show results and must be continuously worked on. It is not a magic pill. It never was.

Proper training and a correct understanding of how to operate in a CRM environment are critical for CRM strategic success. Everything must move in the same direction and that direction is towards maximizing positive customer experience to optimize sales and profits while building positive branding.

On the other side of the supply and demand line, CRM vendors must also promote the idea of CRM as a business strategy that needs to be continuously studied and refined in order to be successful. CRM vendors must do more than just sell their CRM technology but also the right training, process restructuring, advice and good business coaching when helping their customers adopt CRM strategies.

CRM In A Coffeeshop ???

There are 2 coffeeshops nearby my house in USJ3. I will normally go to Restoran New Apollos during the weekends in USJ4 instead of Restoran Casablanca which is only a few blocks away. Each time I go to Apollos, the owner (whom I normally call him Uncle) really knows what I want. He will greet me by my name and serve me with a glass of teh peng ‘ice tea’ and bring an ashtray to me even before I ask him to. However, my wife will always complain when we go there for lunch because it is hot over there. But this does not deter me from going there every weekends.


Then recently there are lots of so called high end coffeeshops sprouting everywhere in town, such as Old Town, Old Taste, Pappa Rich, etc. They are selling the same type of food and drinks but with a higher price because of the décor and they are air-conditioned. I had been to a few of these coffeeshops and realized that their service is really poor. You could just sit there for 10 minutes and no one will come to serve you. This is the main reason why I always hesitated to go to these coffeeshops for a drink. This could be one of the reasons that when a new one opens, the older ones will be empty.

What I am trying to say here is that identifying customer’s touchpoints and customer engagement is very important for today’s business environment. From the above, we could see that the owner of Apollos has identified my touchpoints which is the way he greets me and the service he provides. He is able to engage me and identified my needs as his loyal customers. What differentiates him from the other owners is that he has the ability to identify his customers, in this case which is my wife and an advocate (raving fans) which is me.

By identifying his customers, he knows how to engage his customers and his priority is given to the loyal ones. He knows who are his profitable customers and always ensure that he does not lose them.

How about the high end coffeeshops? What I can see is that they have only focused on sales and totally forgot the importance in engaging their customers. They are unable to identify their customers and build customer loyalty. This is one of the reason why they are unable to sustain when a new one opens.

Nowadays, building customer loyalty is essential in every business. It is much more profitable to retain a customer than trying to get a new one. Building a strong relationship with your customers takes time and effort. A proper CRM solution is essential in today’s complex business environment. Many people would assume that CRM is just a tool but in my opinion, we use CRM as a marketing strategy. It allows the business to have a 360 degree view of its customers and how to strategize the business to engage with its customers.

From the above examples, we could see that CRM is very important in every aspect of a business no matter how big or small is the business. I guess the Apollos owner has a CRM solution in his back of his mind that allows him to strategize his way of engaging his customers. Isn’t this what a business should have? The bottom line is simple to understand but the execution is complex. Businesses must immediately re-evaluate the way they touch, influence and serve their customers.

'Black Widow' CEO

This is a very interesting blog that i wish to share. Its a little bit lengthy but really interesting. The so-called 'Black Widow' CEO does exist everywhere even here in our own country. So have a pleasant read!



Killing America’s brands, one lousy C.E.O. at a time.
March 31, 2009 by Olivier Blanchard


How “Black Widow” C.E.O.s and Caretaker Managers are choking the life out of the world’s most profitable brands:


Fellow brand guy Rob Frankel and I don’t always agree on everything, but more often than not, he an I find ourselves on the same side of the fence, shaking our heads at corporate execs who somehow manage to choke the life out of an otherwise solid brand. They are the corporate world’s equivalent of the proverbial black widows - women who marry for money, kill their husband, and then move on to their next prey.


This isn’t to say that black-widow CEOs purposely kill the brands they are hired to manage, but it would be a stretch to pretend that they have any brand’s best interest in mind: By the time these guys leave - usually after just a few years - the size of their golden parachute seems to be in direct proportion to the damage they have caused.


The worst part about this is that in spite of their horrendous track record, they keep getting hired to run more companies and brands into the ground with the efficiency of an enraged elephant trying to muscle its way out of a porcelain store.


Rob Frankel has some pretty interesting things to say about this phenomenon, and looks at it through the cultural prism of the Three Generations of Wealth principle, in which the first generation creates the fortune, the second generation spends it and the third generation loses it. Pretty clever if you ask me.


Per Rob:

Many American brands are victims of third generation “caretaker” managers,
who themselves never had to build the very brands they’ve been charged to
manage. Living off the fat of the land, they’re complacent managers who fear
innovation and risk, the type that figure their brand will always be there,
because it was always there for their fathers and grandfathers.

The trouble is it doesn’t work that way. The grandfathers who built the brands
knew the power of a brand. They knew how to constantly build and reinforce their value. Caretaker managers, however, spend more time on the golf course than they do building brand value. In fact, most CXOs don’t truly understand what a brand is, let alone how to build its value. And so while the caretaker managers might hold hands, close their eyes and wish real hard, their brands continue to wither from neglect, with market shares shrinking into a mere slivers of what they once were.

But it isn’t enough to just point a finger at ineffective CEOs without looking at exactly HOW they are destroying the brands they should be elevating. There is a method to the madness, and here it is (in its simplest form).



Again from Rob:

Year One: Get hired by suckers whose company is hemorrhaging cash and market
share to the point that their desperation clouds their good business sense.
The Caretaker uses this first year to make promises and “assess the
situation.”

Year Two: Caretaker begins sniffing out departments where he can “cut costs”,
drastically slashes budgets and tosses out the very employees who built the
company. By cutting costs, he hopes to “restore profitability.”
(And on paper, it works.)

Year Three: The costs are cut, but the Caretaker has done nothing to increase
revenues. While profits have increased, overall revenue is down and company
infrastructure is devastated to the point where any hope of a real financial
recovery is gone. But the Caretaker Manager doesn’t care: His deal is done. And
by the time the folks who hired him find out how much damage he’s caused, it’s
too late. His recruiter has already landed him at another company where he can
do the same damage all over again.

The key element of this process is obviously Year Three: a) The black widow CEO has done nothing to increase revenue, and b) the company infrastructure has been severely weakened.Not a good combination.


By then, customer support (one of a company’s most important brand-reinforcing touch-points) has been outsourced, most departments are stretched well beyond their operational limits, and most of the company’s true management talent has left. Meanwhile, because little or no work has been done to enhance or even maintain the brand’s relevance, customers have started to shift en masse to competitors more concerned with creating value than cutting corners… err… costs.


Rob goes on to cite Chrysler’s choice to hire controversial serial CEO Robert Nardelli to take the helm as an example of this process:


According to the Los Angeles Times:

In Nardelli, Chrysler is getting a former senior General Electric Co. executive,
who was both credited with overhauling purchasing and technology systems at Home Depot and widely criticized for pay and severance packages seen as
excessive.

“This is an interesting choice, and I’m somewhat perplexed by it,” said
Erich Merkle, an auto industry analyst with IRN Inc. “There are still things
that Chrysler needs long term and I’m not sure Nardelli can provide them.”

Right. Things like vision, direction, purpose or clarity, perhaps? Heck, anything that even closely resembles a strategy beyond growth through acquisitions and further rounds of cost-cutting?


Now we’re on to something.


It should be said that Nardelli’s current annual salary at Chrysler is exactly $1, so kudos to him for at least playing along with Washington theatrics surrounding the spectacular bailout his company is currently benefiting from (especially considering his past history with grossly excessive executive compensation.) That being said, given his history, how can board of directors look at a guy like Nardelli and think “wow, this guy can really turn around Chrysler and get us to the top again?” His track record and tactics are pretty clear.


Is there a forest vs. trees problem going in in the corporate world, or are the boards that appoint these black-widow CEOs that clueless? (The question is not rhetorical. I really want to know.


How to spot a caretaker manager posing as a leader: Look for short-term P&L mirages instead of actual growth:


Something to think about: Efficiency is nice when you’re a CFO or a COO. A CEO’s job is considerably more complex than just hacking off unprofitable divisions and cutting costs to the point of operational anemia, however. (See Year Two, above.) Would Nardelli make a great COO? With the right CEO looking over his shoulder, probably. But CEO? Not on your life. Yet here we are, watching Nardelli accelerate Chrysler’s nose-dive by favoring short term profitability through aggressive cost-cutting over actually rebuilding a limping company and the brand that once made it successful. Sure, efficiency and profitability may look great on paper, but the end result, when not tied to long term strategies is almost always disastrous.


And if you don’t believe that a CEO can resurrect a company by understanding and embracing the value of its brand, just look at Steve Jobs and Apple. Consider for a second what happened to Apple when he left, and how his return a) brought Apple back from the brink, and b) turned it into the powerhouse that it is today. Did Steve Jobs rebuild Apple by cost-cutting and focusing on short term profitability, or did he set out to rebuild Apple’s relevance and culture of innovation again? (No need to think about the answer. It’s a rhetorical question.)


Now compare a black widow CEO like Nardelli and a visionary CEO like Jobs. What kind of CEO builds powerhouse brands and what kind sinks them? (Last I checked, Apple wasn’t applying for bailout money.)


Why is this a relevant topic this week? I’m sure you can draw your own conclusions, but the main catalyst for this post was Rick Wagoner’s precipitous removal from the helm of General Motors over the weekend… and subsequent appointment of GM’s current COO (and former CFO) Fritz Henderson. Now… I don’t know Mr. Henderson personally and haven’t followed is 25 year career with GM, so my questions about this choice as a replacement are completely uneducated and skewed towards today’s argument, but hear me out for a second.


Given what we have discussed today and what we know of corporate America’s habit of rewarding CXOs for short-sighted performance rather than long term growth, ask yourselves for a moment if the best possible choice to lead an ailing company (like GM) is really its former CFO/COO.


Do cost cutting and operational efficiency REALLY impact revenue, or do they mostly help the company’s P&L look good while sales continue their downward trend?


Can a 25-year insider/veteran of GM who has contributed during his entire career to the downfall of a brand really bring new vision and infuse new life into a dying company?


As I was researching this topic for today’s post, I happened to zero-in on a comment Edmunds.com’s Chief exec. Jeremey Anwyl today in an AP story on GM’s move, which he called out as little more than “political theater.”


I couldn’t agree more.


The point here being: Sure, Wagoner being pushed out was a good move considering Chrysler’s horrendous performance and complete lack of direction, but Henderson’s appointment basically negates any kind of forward momentum or positive outcome for GM. He is just another GM exec with absolutely nothing new to bring to the table.


It doesn’t matter how deeply GM and Chrysler cut costs. If neither company focuses on rebuilding their brand(s), they will not be able to rebuild their revenue stream. Period.


More of the same breeds more of the same breeds more of the same, and so on:


Case in point: The AP story makes some good observations about Wagoner’s success in cutting costs and improving operational efficiency at GM, but looking at the big picture, what did the cost-cutting really accomplish?


$82 Billion (yes, with a “B”) in losses in the last four years. That’s what.


Let me say that again: $82,000,000,000 in losses in just four years. (Source)


Does this sound like GM was moving in the right direction with the cost cutting and “restructuring?” In that time period, did GM’s brand as a whole capture our attention the way BMW, VW or Lexus did?


If you find my argument a little weak, ask David Cole (chairman of the Center for Automotive Research in Ann Arbor, Michigan) what he thinks:

“I don’t think you would see any shift or significant change at all with
Rick’s leaving. I think the course that they’re on, they’re on.”

You don’t say. Yet Senator Charles Schumer’s (D-NY) comments on the change indicate how deeply rooted our general cluelessness about the value of true leadership and objective change really are:

“Given the history, a change in management could hardly hurt and might do some
good.”

No, Senator. Change for the sake of change is just noise. Replacing a caretaker manager with another caretaker manager from the same management culture is not an improvement. It is nothing more than political gesticulation and pointless churn. What we do need, however, is fresh talent at GM. What we need are executives who want to rebuild the GM brand and will attack that task with the passion of a true believer. We need people who understand GM’s importance to the automotive industry and their millions of fans - both in the US and around the world - and will map out a future for it rooted in clarity of purpose. That kind of leadership looks a lot more like Steve Jobs, Richard Branson, Yves St. laurent and John Mackey than Robert Nardelli, Rick Wagoner, Fritz Henderson or Edward Liddy.


Stop mistaking managers for leaders. Please, for the love of god, learn the difference between the two.


The proverbial fork in the road: How companies choose to either succeed or fail:


Ironically, GM currently owns some of the world’s most more recognizable automotive brands, with Cadillac, Saab, Hummer, Chevrolet and Saturn making the list… So it shouldn’t be all that hard for GM to make a comeback… But unless it learns to embrace the power of the brands it depends on to remain profitable, it doesn’t stand a chance.


(As a taxpayer,) what I would like to hear from Mr. Henderson is a statement affirming a new direction in GM’s strategy. Specifically, one that leverages what Cadillac, Saturn and Hummer have managed to accomplish all on their own: Create unique cultural niches for themselves and build loyal brand followings. Cadillac especially, having reinvented itself over the last decade, could help ailing brands like Buick, Chevrolet and GMC find renewed purpose in a market saturated with banality, derivative designs and watered-down identities. In short, what I would like to hear Mr. Henderson say is that the lesson Cadillac learned in the course of its own successful reinvention will be applied across all GM brands effective immediately. That GM, while continuing its commitment to reducing costs where it makes sense will shift its focus back to making cars that people actually want to drive. That GM as a whole has a plan to completely revamp its design and Q.A. departments (please hire some Germans already) in the next six months. That it will immediately end production of all models with notably low market share. And most importantly, that it will actively seek to bring fresh executives to the table. Not US automaker flunkies from the same stale pool that got GM and Chrysler to the brink (like himself), but professionals from other industries with a talent for actually developing culture-affecting products and building brands from the ground up. And that - to that end - he plans to voluntarily step down from his role as C.E.O. sometime in the next year to give them room to work their magic. I want deadlines, direction, purpose and unwavering commitment. What I don’t want is more hollow posturing and vague rehashes of already failed strategies.


Sadly, hollow posturing is probably all we can hope for at this stage in the game. Even the White House seems content to let heads roll at GM and Chrysler without demanding real change. As a result, what we are likely to hear from both auto giants over the next few months will be the same old song that got us here to begin with: More cost-cutting. More attempts to return to short-term “profitability” by hacking their companies into strategic and operational impotence. More bean-counter promotions to leadership positions. More lame duck partnerships. More requests for bailout money. In short, more of the same. Why? Because expecting true leadership from caretaker managers trying to hold on to their jobs in a tanking economy is about as realistic as expecting my chihuahuas to start quoting Buddha, Mohammad and Ghandi in their native Spanish. (Though sadly, the latter is actually more realistic.)


The most likely outcome of this ongoing corporate FAIL will be an endless circus of caretaker managers taking turns playing C.E.O. musical chairs while their once mighty companies burn to cinders around them.


Let’s face facts: Any idiot with a calculator and a spreadsheet can cut costs to make his P&L look good at the end of the month. You don’t need 25 years of executive experience at the Fortune 500 level to master that little trick. So what exactly qualifies executives like Nardelli, Wagoner and Henderson to run (heck, to rescue) companies like Chrysler and GM?


The question I would like to ask these guys is simple: When you run out of costs to cut, then what? (Besides jumping ship or asking for bailout money?)


Anyone? Bueller? Bueller?


Repeat after me: No major brand ever rose to a position of market dominance by focusing on cutting costs.


Apple. BMW. Starbucks (in its heyday). Microsoft. Cartier. Disney. Newman’s Own. Michelin. Breitling. Cervelo. Oakley. Hermes. Pixar. Assos. The list goes on.


Is it really so hard to grasp these simple concepts? That P&L manipulation through chronic cost-cutting is no kind of strategy at all? That preserving the health of your revenue stream trumps all other business functions? That everything you do in a company should be done with one objective in mind: To create customers? That a C.E.O. can’t just focus on the dashboard or the rear-view mirror while he drives his company forward?


This really isn’t rocket science. Is it?


Is it?


Thanks for bearing with a particularly long post today. You guys are good sports.

Database Marketing

Japlo Questionnaire!

Last weekend I bought a Japlo pacifier for my baby girl. This is pretty normal except that this time I was given a questionnaire to answer. My wife and I have been using Japlo for a couple of years now and truth be told; although it has been around for more than 10 years, it’s pretty difficult to shop for with only a few retailers carrying their merchandise. And we were never required to complete a questionnaire of any kind before.

Initially, I was pleased. This was an opportunity for me to give some feedback and it also showed that Japlo was really interested to know their customers. I also found myself fantasizing that with new market information; Japlo would then be able to expand its distribution and not be so difficult to shop for anymore.

Unfortunately, these positive feelings quickly diminished when I started to fill up the questionnaire. First, there were spelling errors in the tagline and the survey questions. What happened proof reading? How can customers like me continue to trust your product quality if you can’t even put out a simple questionnaire properly?

I also found some of the survey questions to be baffling. At the end of the questionnaire, I was asked to only provide my name and home address. If it was not for the mystery gift, I would have just threw it away.

The whole experience was distasteful. I lost some of my confidence in both their brand and product quality after this episode.

Being a marketer myself, apart from the mystery gift incentive to encourage participation, there were several things that Japlo could have done better.

1. Proof read all your marketing materials. Your customers relate the quality of everything you do. One bad apple truly spoils the whole barrel.

2. Set out your objectives for the questionnaire and design your questions to achieve these objectives. Where possible, use the same words your customers use everyday to connect to your brand.

3. Also, prioritize your questions so that you’re not asking irrelevant questions that baffles your customers. Ask only pertinent questions. Build and keep the momentum.

4. Allow your customers the choice of how they want you to contact them. Give them space to give you their home address, email address or telephone numbers. Everyone has specific social taboos. In fact, by giving your customers this choice, you are optimizing your customer touchpoints.

5. Always give out your incentives at the point of purchase if that’s possible. This way, you collect completed questionnaires faster and increase participation rate. The longer your customers hold on to your questionnaire, the more unlikely they will eventually participate.

6. Always track the results of your marketing activities. Monitor and calculate how much benefit you derive against the money you invested i.e. know your marketing ROI. If it’s a huge marketing activity, software like AvaBlitz CRM Analytics can be a massive help to you.