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May 2022


Be careful what you say–the whole world is listening!

I was browsing some Google Alerts for one of my clients and found a very long thread on a trade publication’s forum. Apparently someone had asked an innocent question, “Has anyone ever used <insert client’s name here>?”  to which a number of people replied, “I called them and the sales person was arrogant! He wouldn’t even talk to me unless I agreed that I was willing to spend a large sum of money with him.”   Some other customers posted with positive comments, but the negative far outweighed the positive.

Be careful what you say

Be careful what you say

Clearly there are additional problems here, but the point I want to make is that you need to ensure any customer-facing employee knows that anything they do and say just might be used against them!  In this case, a salesperson frustrated by low-price tire-kickers may have simply been overly rigid in pre-qualifying customers–but that’s not the message that is now permanently archived for the rest of the world to see on a leading industry message board.  It’ll take a huge amount of advertising, marketing, and PR to overcome this single, overwhelmingly negative post.

As part of your customer strategy, you need to ensure that you properly handle those prospects or customers that don’t fit your customer value profile.  If a prospect isn’t in your target market, find a way for your reps or agents to let them down easily, or refer them to a lower-priced competitor, but don’t simply tell them to take a hike, because they’ll tell the world.

Tell me about your experiences where someone, in a moment of frustration, says the wrong thing and the rest of the world hears about it….

No More Doom & Gloom!

It seems that everywhere you turn, you hear more doom and gloom!  Is there any hope?  There sure is! This quarter is shaping up to be my best quarter ever, and December is probably going to be my best month ever.  A number of my clients initially decided to put things on hold when they learned of the financial crisis, playing it safe until they could figure out which end was up. Like many, I was concerned as well.

However, I noticed a trend–customers are trading downwards! Forced to make financial tradeoffs, they’re trading down from Target to Wal-Mart. Down from Uno’s to McDonald’s.  What does this mean to you?  It means you have a huge opportunity to capture new customers that may be leaving your upper-tier competitors.  These are extremely profitable and potentially very loyal customers.  If you play your cards right, you can keep them far longer than the end of the recession!  Read on for an article that talks about this in more detail.

By changing your customer strategy slightly to capture this new dynamic, you can easily acquire more business, much faster than before.  Don’t give in to the temptation to stop marketing or to stop gathering customer insight.  There is still business waiting for you, and as this article points out, those companies that continued to invest in marketing through the recession enjoyed huge returns for as many as three years beyond the end of the recession.

How are YOU taking advantage of the changing times? How is your customer strategy changing? I’d love to hear what you’re seeing in your customer base and what you’re doing to capitalize on it!  Send me a note at with your story.

Living Large–Without Power!

Ice in the pine needles

Ice in the pine needles

We’re still without power and don’t expect to have it restored before Monday.  It has been billed as the worst ice storm ever to hit Massachusetts, and left 1.2M homes without power.  During the night we would hear horrendous POPs as pine tree limbs about 8″ in diameter would shatter under the weight of ice on the needles and crash downwards to the ground, often times taking other limbs with it.  We saw electrical transformers explode on our street and then absolute silence as the hum of electrical devices or the dull roar of the boiler in the basement shut off.

We awoke to a beautiful winter wonderland, with the sun glistening through the ice on the trees.  There were still occasional pops and thunderous crashes from overloaded branches crashing to the ground followed by a massive wave of ice shards tinkling to the ground like glass shattering from the 3rd and 4th stories above us.  Not to be deterred by the lack of electricity, we pulled up our big  3-burner camping stove, plugged in the propane tank, and fired up the griddle.  Within moments, we had golden brown pancakes, hot chocolate, crisp sausage, and perfectly cooked eggs.  We invited our elderly neighbors to the breakfast feast and they were grateful to have something better than cold cereal to eat! Read more »

If Not Now, When? You Can’t Afford to Delay Strategic Thinking for your Business!

Last month I noticed a warning light on my car’s dashboard telling me that it was time toStrategic View Through Binoculars have my brakes looked at. I thought, “No, I’m pretty busy-I’ll let it go until next week.” Next week turned into next month… and then I heard the grinding. The repair bill was more than four times what it would have been had I dealt with the issue when it first arose.

Strategy is often the same. It is uncomfortable, nobody likes doing it, and it seems impossible to take the time away from a hectic schedule filled to overflowing with customer fires, internal crises, delivering for customers, or closing new business. Yet, what are the consequences of NOT stepping off the runaway train and spending time preparing for the future? Read more »

How Long Before CCOs Expire?

I was reading a blog post that summarized a BusinessWeek article regarding CXO tenure article based on research by Spencer Stuart.

CXO Tenure

I think it is interesting that the CMO tenure trend actually increased to 26.8 months in 2007 from 23.2 months in 2006, reversing the slight decline from each of the 3 years prior. Could it be that the CMO role is maturing?

While all the data are not in yet, I’m seeing something similar with Chief Customer Officers (CCOs). The average tenure of the CCO seems to be about 18 months, with some notable exceptions on either side of the average.

Read more »

“Going Green”-Do Customers Really Care?

Do customers really care about about vendors that go green?  Up until today, I’ve never seen anything beyond hype–vendors touting how green they really are in hopes of one-upping their competitors. Everyone has been jumping on a bandwagon, hoping to out-green their competitors. However, I’ve not seen any form of customer research that proves that a.) customers care about green vendors, or more importantly, b.) that they will be willing to pay more for so-called green products.  Without the latter, going green may be the right thing to do, but it is merely a cost that many companies cannot afford to incur in these difficult times.

Until today. I read an article in Advertising Age that described results of a Hearst magazine reader survey that found that 43% of their readers would stop buying products that were not eco-friendly, and 43% said they would pay more for a magazine printed on recycled paper.  This is a surprisingly significant percentage.  I applaud companies that are going directly to customers to find out how green they want them to be rather than simply jumping on the bandwagon.

Now, the question is what they do with this.  If they raised prices, will the 57% defect?  By raising prices, will they offset the potential cost of defections?  Should they develop a premium-priced product that appeals more to the greenies and run the risk of cannibalizing current sales?  Or should they hold the course until a larger percentage of people are converted to greenies?

What do you think they should do?  I’d love to hear your comments.

Why Customer Satisfaction Surveys Can’t Help You Understand Your Customers

I am amazed at how often I run into companies that don’t understand their customers. In my previous post, I discussed the issue of a Fortune 20 company that completely missed the mark in their marketing & sales, and was paying the price in terms of severe downward price pressure, hugely dissatisfied customers, and appalling customer defection rates.

Fred Reicheld wrote a piece in 2006 entitled, “The top 10 reasons you don’t understand your customers” that describes the critical reasons why customer satisfaction surveys are inherently flawed. I’ve adapted his list to my own as follows:

There are too many questions

I worked with one company that had upwards of 80 questions on their customer satisfaction survey. Another had 30+ questions for a relatively simple transaction. As I wrote in my recent newsletter,

Last month I had occasion to speak with a small company that had been doing a regular customer loyalty study for a while. However, as I looked at their data, I realized that they were crippled and flying blind.
Customer feedback systems should be powerfully insightful and revealing, yet in my experience, they’re often diluted, lacking the specificity needed to drive intelligent responses, giving insufficient weight to your most valuable customers, or worst of all, never show significant improvement due to lack of accountability

I recently wrote in a whitepaper entitled, “5 Steps to Maximizing Customer Loyalty” that many satisfaction surveys I’ve seen lack specificity of purpose. They are diluted by marketing, engineering, and other groups hoping to squeeze in “just 1 or 2 questions” as long as something is going out to the customers. In this fashion, surveys get bloated and lack focus.

What’s worse yet? Look at the implied costs you are incurring for this survey: If you had 100,000 survey respondents that took approximately 10 minutes per survey (about 30 questions), at an average hourly rate of $100/hour, you would be asking your customers to spend a total of $1.6 million just to complete the survey. If you went all out with an 80-question survey that took 28 minutes, the implied cost would be more than $4.5 million. At this rate, you surely cannot afford to survey your own employees. While the cost is spread out over 100,000 customers, you are still asking them to spend $45 each to respond to your survey, which, if you did it 4x/year, is nearly $200 per respondent. That’s prohibitive.

The wrong customers respond

Depending on whom you’re surveying, you may be polluting your customer insight before you even begin. Clearly, those with an axe to grind or who are otherwise dissatisfied customers are more likely to respond to surveys in order to “give it to you with both barrels.” As with most any survey, selection bias can overrun the results. In addition, lower levels in B2B organizations may self-select much more prevalently than the more senior levels. These levels are vastly different in their purchase priorities and value drivers. Thus, if you are interested in understanding the decision-making process of senior management, a customer satisfaction survey most likely isn’t going to be the right way to assess customer needs.

Companies fail to take action

While not specifically mentioned by Reicheld, this is a huge issue. Countless times I’ve studied customers and presented specific issues that need to be addressed to improve customer relationships, only to have no action taken whatsoever. Customers are told at the beginning of the process, “You’re feedback is very important to us,” only to feel ignored when they fail to see any changes in the issues they raised. Asking questions of customers and failing to take action is more damaging to customer relationships than never asking in the first place!

Satisfaction doesn’t correlate with customer purchase behavior

There have been numerous articles written lately about customers claiming to be very satisfied defecting to a competitor. How can this be? While there may be many possible reasons, there is one that stands out: Customer satisfaction surveys tend to measure smoothness of transactions, not a likelihood of future purchase. I may be satisfied with my purchase of a piece of software from a vendor, but next week I may discover a different software package or even the same package at a lower price from a different vendor. Bruce Temkin of Forrester Research has been championing the cause of creating an overall customer experience as a bridge with real loyalty, rather than focusing on a pure transactional customer relationship.

Manipulation wrecks credibility

Reicheld told the story of automakers scheduling “satisfaction” calls asking if everything is ok just before J.D. Powers called to assess customers’ satisfaction with their new purchase. He also writes about the dealers’ efforts to game their internal rating system by showing pictures of the satisfaction surveys filled out with the top ratings. My favorite is the phrase I saw in a sleazy Toyota dealership, “If you can give us a perfect score, please fill out the card.” Some dealers and service departments will even “buy” the top satisfaction scores with free oil changes, floor mats, etc.

With every survey, someone will find a way to game the system, wrecking the results and inadvertently rewarding bad behavior.

Bottom line? Customer satisfaction surveys shouldn’t be your first choice for understanding customers. Instead, you should focus your initial efforts on the following steps:

  1. Segment your customers to separate the best from the worst (ignore the middle for now)
  2. Speak directly with your best customers to ask them why they buy, what they value, and how your products and services benefit them
  3. Spend some time analyzing the results. What makes your best customers the “best”? What are the characteristics that will help you find more just like them?
  4. Before you go any further, immediately address any customer dissatisfiers and rescue any relationships that may be in jeopardy
  5. Create a Value Communications Map that Identifies customer value drivers–those “hot buttons” or critical purchase drivers that influence the most profitable sales, and the ways in which your products and services address each hot button
  6. Determine proof statements for each value driver, whether they be ROI calculations, targeted customer testimonials, “what-if” statements, cost estimates, etc.
  7. Reframe your marketing and sales efforts using the Value Communications Map as a framework to base all of your communications around
  8. Identify & pursue any newly discovered opportunities within existing clients that may have been overlooked in the mad rush towards revenue.
  9. Clarify and evaluate any newly discovered product/service or new market opportunities resulting from your customer visits
  10. Repeat as necessary to cycle through the important customers

By following these steps, you’ll cement your relationships, gain invaluable insight into the minds of your customers, and focus your company on those issues that truly matter to your customers. In so doing, you’ll end up driving top-line revenue, bottom line margin while at the same time developing significantly more loyal customers.

Why don’t you understand your customers?

The Fortune 20 company I was working with couldn’t understand why a segment of their customers were defecting in droves, and those that stayed were hammering them on price, causing their margins to spiral downwards faster and faster with each quarter’s results.

The company had focused their marketing around three primary themes:

  1. Inventory control
  2. Cost containment
  3. Raising gross margin

While these may seem reasonable at first glance, they were nothing at all like what their customers wanted–and this disconnect ran the risk of driving them out of business. Read more »

Customer Service Sadly Lacking

Mike McLaughlin over at Geurrilla Marketing blog commented on the Sad State of Customer Satisfaction saying,

For the third year in a row, customer service ratings are taking a beating. According to researchers at Accenture, almost half of the 3,500 consumers surveyed said that their service experience with companies was fair, poor, or terrible.

Making matters worse, consumers aren’t just complaining about poor service. Most respondents (59 percent) reported that they switched to a new provider in the past year, specifically due to service failures.

The report, titled “Customer Satisfaction in the Multi-Polar World: Accenture 2007 Global Customer Service Satisfaction Survey Report”, studied more than 3,500 consumers in 2007 across 5 continents. They found that even though overall service satisfaction was highest in the US, only 7 percent of U.S. respondents rated it “excellent,” and 28 percent said it was “poor/terrible” to “fair.” Read more »

H-P’s Unofficial Chief Customer Officer: Ann Livermore

What is the key to Customer Strategy?  A Chief Customer Officer who is regularly speaking with customers and drawing connections where none existed before. In today’s Wall Street Journal, Carol Hymowitz profiles Ann Livermore, H-P’s head of storage & servers as well as the software and services business.  In years past, she was dubbed H-P’s Chief Customer Officer.  In the article, she describes herself as someone who “understands how processes and people work at the company.”  She’s very focused on customers, “talking to two or three big ones every day.”

In conversations with major financial services companies several years ago, she listened when they said that they were spending too much time & money operating their data networks.  As a result, she drove H-P’s strategy for building next generation data networks that are driving significant growth for H-P’s  software and services.   Ms. Livermore’s division reported $37.7B in revenue last year, or 36% of H-P’s total.  More recently, H-P’s purchase of EDS was driven by conversations with companies that had huge outsourcing opportunities that her group couldn’t handle.  Ms. Livermore helped drive the strategy whereby Ronald Rittenmeyer, current chief of EDS, will assume the outsourcing portion of H-P’s services business and report directly to Mark Hurd, CEO of H-P.

What do we learn from the article?  The critical imperative that senior executives have to be speaking with their most important customers on a regular basis–and drawing the connections that will help grow the business.

How do you do so?

  1. Identify your most strategically important customers that are the most critical to your growth
  2. Orchestrate meetings with key executives–not just buyers–to get their perspective on their business challenges and opportunities, even if you may not be currently providing solutions to the problem areas
  3. Capture the issues in your CRM or other knowledge management system so you can return to them again if they crop up in other areas
  4. Take time out to review customer data, looking for connections and correlations
  5. Where correlations exist, invest in discovering the ramifications

Like Ann Livermore, you may just find a huge opportunity to grow your business.