Interview

MM: For me, I take this notion of a conversion funnel and call it a “buying funnel for new technology”. Most of the hindering forces to change really come back to fuzzy accountabilities. There isn’t anything that you as a vendor can do about the accountabilities, and therefore, the lack thereof in a buying organization other than to suffer RFIs. These are all endless sales cycles.

BK: Yes. I couldn’t disagree with anything you just said, because that’s the environment. I guess we’re starting to slip away from a technology discussion into a social behavioral discussion. I can only bring this back to my personal world.

MM: Right.

BK: I sell technology with a hope and an assumption that it’s going to improve processes and effectiveness, and make somebody’s life at the company I’m selling it to better. The personal account-ability and responsibility I want to take is constantly educating myself on trends, best practices and impact. And the result of that education and knowledge, I want to bring to the market by saying to my customers, “I’m not just selling you technology that I know has worked for others and I hope works for you,” because I can’t control you changing. Rather, “I would like to sell you technology as the first phase of a process of engagement that is continued consultation and mentoring on implementation and best practice.

MM: Yes. That really defines the role that I might refer to as a “trusted technology advisor.” That really emphasizes facilitating or enabling a new or enhanced operational capability of the firm. So getting people to choose what works almost always comes back to communication, interaction and collaboration that a trusted advisor would hold the context for. It’s about always having the next step clearly identified with some sort of 30- or 45-day plan that is moving you toward that particular step. Does that kind of describe your role, at this point?

BK: Absolutely. That’s a role I love to have. I think the challenge is always that vendors are looked upon as providers—not necessarily consultants or advisors.

MM: I think the vendor that succeeds in moving forward will, in fact, have to become a trusted technology advisor and an enabler of change— and a facilitator of the communication, interaction and collaboration that must occur across functional lines or lines of business within an organization, so as to unlock the value of the technology that they bought.

BK: Agreed.

MM: Fabulous. On that note, I’d like to conclude our session today. Thank you again.

BK: Absolutely, Michael. It’s been my pleasure.

MM: That’s completely fair. Lastly, I’d like to address the culture of change.

BK: Yes. That’s been the big frustration as a technology salesperson for 20-plus years. Technology should stay ahead of actual implementation, or I wouldn’t have anything to sell tomorrow. But being on the bleeding edge in most cases with these technologies, it’s been frustrating to find that getting folks to embrace change—not necessarily just technology—they expect, “I’m going to buy your stuff and I’m going to get all this great insight, and therefore, things are going to change.” Well, they’re never going to see improvements if the organization isn’t structured such that we’re going to take that information and make use of it.

MM: This gets to a real focus of ours around what I call, “Innovation Leadership.”

I’ve found that many product companies—whether Apple or HP or Bose or Ford… Many product companies have well documented, structured, and repeatable innovation processes for product innovation.

But when it comes to process innovation and service innovation, I’m finding that most companies are completely out to sea. Almost completely bereft of any structured or repeatable processes for innovating new processes.

As it relates to new technology, most senior-level executives—specifically those who are signing checks or releasing funds—tend to see their organization in terms of operational capabilities. They consist of systems, processes and accountabilities. I’d define an account-ability as an agreement by and between an employer and an employee. The account-ability is not just a role and responsibility but also explicit daily reporting requirements by which an employee reports on a daily and weekly basis some number of facts that—when rolled up—indicate an aggregate process toward strategic planning. Or progress toward objectives of the strategic plan.

But Bob, I’ve found that most companies have very fuzzy, indistinct if not conflicting accountabilities for people in their groups that work for them. As a function of not really having an explicit by and between an employer and an employee with a focus on not just, “Here’s what you do,” but, “Here are the five business facts that you agree to provide on a daily basis,” that will then roll up into some overall organizational performance scorecard.

As a function of indistinct, incomplete non-existent or conflicting account-abilities, it’s very difficult to introduce any proposed change into that organization. As soon as you say, “Well, let’s do this,” all of a sudden, you get a whole bunch of people in the room starting to turn funny colors and looking down at their shoes and saying, “But you don’t understand!”

Right?

BK: Absolutely.

MM: This mirrors what we’ve seen in the IT service management area. Specifically around self-managing autonomic computing, advanced by IBM and other vendors. The core building block concept of self-managing systems is something that they call the “MAPE” loop. That’s an acronym for Monitor Analyze Plan Execute.

BK: That makes sense. In my experience, the handicap to implementation or improvement is a culture of change. It’s an environment where you can be agile enough to ask those questions and then make the appropriate changes. That might be something as simple as, “Why is this page not optimizing correctly,” and then having an infrastructure where you don’t have to wait weeks or months for a web development team to make desired changes in order to have an impact.

I think the desired environment is something everybody would sign up for. Automating it or having technologies to support it would be a desire as well. Now it’s a matter of, “Can I get any bang for the buck if I spend moneys on systems?”

MM: Yes.

BK: Is that fair?

MM: So as a way of starting to summarize these points—what are the things that a proactive eBusiness manager would want to do in terms of maximizing the efficiency of their nurturing process? Clearly we need to monitor what’s going on. Right?

BK: Yes. I think we need to monitor it at a very tactical level. Internet managers should spend more time answering the “why” questions that come from campaign reports, analytic reports, voice-of-the-customer responses, social media pages, etc.

“Why aren’t we getting the response that we expect on campaigns?

“Why are lengths of visits, page views, returns by recent visitors surprisingly up or down?

“Why is customer feedback so infrequent?”

MM: I’ve got data that says, “Oh. I’ve got a user experience or a user interface problem here; I’ve got fuzzy, indistinct content and product descriptions here; I’ve got an SLA that needs to be improved because I’ve got too many timeouts or I’ve got a server overload.” Something like that, right? So, in monitoring, you want to identify some number of things to do. Right?

BK: You’re right. In the beginning it’s about structural and technical issues that tend to be the “fires” that keep most organizations in perpetual reaction mode. Next the organization will focus on product, segment, campaign and other sub-groups to improve interaction and success.

At some point it should become important to transition from being reactive to being proactive. At some point in the life cycle companies will proactively focus on customer experience and improved satisfaction with an eye on turning customers into “raving fans.”

BK: That argument could be fought from the other side, you should talk to SAS Institute where they have hundreds of Analytic PhD’s on staffs that are building very robust predictive models. The question is, “How many commercial companies are sophisticated enough to take advantage of that technology.”

In traditional modeling, companies continue to struggle with defining appropriate and action-able conversion funnels. Marketing is typically concerned with getting more visitors to the site and at the top of the funnel. And Marketing tends to be satisfied if somewhere between 2% and 4% of this top-of-funnel visitors make it all the way through since that meets with “industry standards.”

But who in the organization is focused on increasing that conversion percentage? It seems to me it would be more cost effective and more brand desirable to get a larger percentage rather than focusing on drawing more visitors in. Particularly in an environment of great noise, over lapping options, and fickle consumer behavior!

MM: Yes! The Miller and Heiman folks that came out with that canon of sales management strategic selling that came out in the ’80s—Miller recently wrote an article in Brand Week in which he describes the sales funnel. You call it the conversion funnel, which I guess is a little further down.

He said that most companies—especially younger companies—have these wicked peaks and valleys in their monthly revenue, as a function of spending too much time in the bottom third of the funnel—which he characterized as “closing.” In his model, he simply trisected it into prospecting, nurturing and then closing.

He said it’s very common for a company to spend most of its time-resource-money on the closing function – which leads to these wicked swings in revenue on a month-to-month basis. He said that ideally, you want to have an equal distribution of time, money and resources.

He was advocating—to contradict you a bit—to put more people into the funnel so that some number of them will bust the rate and zip right down to the transaction, because they’re so desperate to do something.

I think to your point Bob, most companies do a mediocre-at-best job of nurturing deals already in their pipeline.

BK: I would fully agree with you.

MM: I concur that for incremental investments, it would seem to me that if you could reduce your attrition rate by just 10%, you could in effect double a conversion rate.

BK: Yes.

MM: In terms of gain-for-pain, it seems to me that getting the easily implemented solutions done first would probably result in a very noticeable and tangible return on investment.

BK: Agreed.

MM: As web analytics goes from more or less forensic reporting of anonymous behavior to now predictive models of what customers are likely to respond to, the underlying analytic discipline shifts from quantitative methods to things that are more forward-looking—be they game theory and predictive modeling.

When we talk about, “Who has skill sets in predictive modeling and econometrics?” Aside from analysts that are working at hedge funds and in New York City, and getting paid $300,000 to 500,000 a year, it seems to me that agencies will step forward into that opportunity with a founder or some equity participant. Secondly, it seems to me that there’d be a natural gravitation toward the largest concentration of PhDs in mathematics—India. And India may emerge, in fact, as the center of excellence for more prescriptive analytics and modeling of games, promotions and brand interaction through a lifecycle.

BK: I guess in response I’d say that the challenge the web analytics vendors play or have right now is that by and large, customers—people using web analytics tools—are implementing 20 to 25% of the capability of the solution to begin with. Limiting their use to data collection, analysis and reporting.

So, the more advanced, predictive modeling that you’re speaking to … while it might be something that they’ll ultimately build towards, the question is, “Will a majority of companies take on the task of implementing this capability?”

MM: I think that the agency will make that an opportunity and will invest in the tools and technologies to automate the tagging of your pages, and the reporting that comes from that, as well as the interpretation of what that means with very specific prescriptive outcomes in terms of what we need to build next.”

BK: I totally agree with you. I think it’s going to have to be a service provider. It’s not going to be the end company that’s going to try to have that expertise in-house.

MM: Yes.

MM: I’m glad you mentioned Coca-Cola. They were one of the early adopters of this smart promotional platform from a company that’s since gone out of business. It’s part of ePrize, now.

It was an interactive, smart promotions platform. It had mathematics underneath it that came from two PhDs in mathematics and game theory. Preference options would be similar to when you get an e-mail from Amex or Delta Airlines and they say invite you to make a bid on these four packages.

They invite you to make a bid, combining n-number of airline frequent-flyer points, membership points as well as hard dollars. They will choose five people over all the contest participants who got those packages.

BK: Cool.

MM: The net result is they end up collecting a lot of data from you. After you do several of these preference options they know, for example, that you’re single and that you have a proclivity for fun in the sun.

There are probably three or four more meaningful things they’ve learned from you as a function of your preference options or preference bids. It goes to the underlying game theory of how you elicit truthful information from anonymous actors.

So, game theory is just the mathematics or science of incentives to induce a particular behavior.

Coca-Cola was one of the very first adopters of this very sophisticated gaming platform. The challenge of course of that otherwise elegant concept is that it takes real rocket science. It takes somebody who’s got a PhD in quantitative methods and game theory to really understand how to construct and design these interactive promotions such that it produces the desired result.

BK: Agreed.

MM: In my conversations with folks in Europe who really seem to be ahead of us, in terms of really understanding the “R” in CRM, really understand that first of all, you need to have a lifecycle model for what it means to be in a relationship with a brand. But also, do we have an explicit data collection model for collecting what I call “brand interaction data,” very early on in the awareness and consideration process?

Something else that I’ve seen in this area that’s really been a startling breakout success for some of the digital agencies is the use of viral videos that are part of a guerilla-marketing program. Viral videos explicitly designed for presentation and consumption at YouTube, FaceBook and some of these other video-sharing sites.

Then, tracking who actually downloads or posts or syndicates in those videos of their Blogs and writes about it. Then making an outreach to the people that posted favorable things about these humorous product placements. Almost like a paid feeding of viral videos.

BK: I’m sure it won’t surprise you to know that Coca-Cola spends a lot of time and energy monitoring that very thing. Feeding that very engine. You didn’t mention it, but I’m sure you’re aware of Second Life. Burger King in particular spends a great deal of time and money on Second Life, which doesn’t immediately correlate back to store sales, but certainly does speak to that lifetime brand.

How do we find our customers in their place of preference and continually reinforce the brand? There are certainly some forward-thinking companies that don’t necessarily interact and sell stuff on the web, but they’re certainly using those mediums to solidify that brand loyalty.

MM: Yes. Early in our corporate history we did a lot of surveys. There were several almost axiomatic truths that have distilled from having surveyed over 50,000 people. I personally have interviewed probably 3,500 or 4,000 people.

Surveys are highly structured, scientific collections of bullshit. They give you top-of-mind associations and more specifically speak to the expectations of the person asking the question.

Most of the survey data rarely comes back to anything meaningful or insightful in terms of buyer behaviors. This really relates to the superficial, although necessary, task of understanding what your customers are thinking about. Understanding that what customers think very rarely correlates to what they actually feel and do.

BK: So in this on-line context you not only ask the question and get the response but you correlate this Q&A to what they were doing during the session and what they did after the question was asked and answered. Perhaps this will provide valuable insight for Customer Experience Management.

MM: The thing that I’ve tracked now for going on a year and a half is that companies have begun to do extended, open-ended interviews with customers at various stages of what I’ll call the “customer journey to success.”

In some cases, they’re not yet customers. In some cases, they’ve just bought something but they haven’t really yet made an emotional commitment to buy it again or to use it. All the way through arm-waving evangelists.

These interviews then get transcribed. Often, verbatim—with all the broken grammar and syntax that it often entails. These transcripts then move into a specialized content database, using a text-mining engine. We start doing semantic tagging, so as to identify topics and trends and topics. And some more advanced text analysis. We start to understand and to quantify things like sentiment. Keywords and phrases that are positive, negative and neutral, as they relate to a particular policy, program, product, technology, market, demographic segment.

So these text-mining and special voice-of-the-customer databases have really started to document and crystallize the taxonomy of awareness, consideration, trial, purchase and advocacy.

I say the taxonomy of that meaning that there are specific keywords and phrases. Some of them are related directly. Some of them are only indirectly related. This taxonomy of satisfaction then becomes the basis for social media monitoring, by which to start tracking the conversation about your product market customer segments, relative to those keywords that you’ve identified—and then starting to really build more meaningful dynamic day-to-day dashboards.

The idea is then to identify who in your market really has emerged as an advocate for a particular type of application or for product usage.

BK: This sounds much like the interaction you would want in a BLOG or social media interview. To get the best perspective you should engage with Jerry Tarasofsky (iPerceptions), Larry Freed (ForeSee Results) and even Rand Nickerson (OpinionLab).

MM: Great. I’m going to use this opportunity, Bob, to circle back on a topic that you introduced earlier. The term that you used was, “Voice of the customer.”

BK: Yes.

MM: I’m familiar with the term from my exposure into Six Sigma and Lean Six Sigma. More of a formal quantification of customer satisfaction and utilization rates and things like that. What do you mean, when you’re using “Voice of the Customer,” as it relates to customer experience management? What does that entail? Where’s it been and where’s it going?

BK: “Voice of the Customer” speaks to technologies that allow for direct customer dialog in an online environment. Primarily this takes the form of surveys and direct customer feedback. In particular there are two companies leading in this solution space: iPerceptions and ForeSee Results. Both have compelling solutions and back it up with consulting from business analysts helping clients to take action on the data collected.

Another emerging opportunity for customer feedback is mining content in social media environments including Blogs, Chat rooms, Facebook and MySpace, etc. Gaining access to this data and being able to aggregate remarks into categories could provide online marketers with tremendous insight about brand perception and loyalty, competitive and complimentary products or services, and many other associations.

The bottom line is companies need to get direct customer responses to add with statistics gathered in other interactions so they have a complete 360-view of their online visitors.