Archive for the ‘CRM’ Category

Apple to Build in U.S. Again

Posted: December 12, 2012 in CRM

According to an article in the NEw York Times, on December 6, Apple announced that it would begin making some Macs in the U.S. reversing several years of manufacturing computers in China and setting an interesting precedent.  Apple isn’t alone in this.  According to another article in the Times, HP has also begun shifting some of its PC production back to the U.S. of A.   But before we start popping French champagne corks (isn’t globalization fun?) we should think about what this means and why it is important.

First off, it has already been widely reported in the last year that demand for PCs and laptops has peaked while demand form smaller devices like tablets and handhelds is on a hockey stick curve of its own.  These devices are rapidly becoming the next generation computer with some functions, like major storage, networking, and big number crunching off-loaded to the Cloud.

So why is this manufacturing shift happening?  Don’t we just send manufacturing trends like PCs to the Far East to live out their useful lives?  We do, but in this case there is a second act of sorts to be accounted for.

As it turns out, and the article describes, the big labor step of making a computer is in assembling the mother board and that is being done quite well by robots, thank you very much, and the difference in the cost of a robot laboring in China compared to the cost of one executing the same instructions on U.S. soil is nugatory.



Fuel price

per gallon



2000 $1.50 $3,300
2005 $2.50 $5,100
2008 $3.50 $8,350
??? $5.00 $10,000
??? $8.00 $15,000
??? $16.00 $30,000
??? $20.00 $40,000

At this point other issues come into play like the ability to be closer to the customer and to deliver a special order quickly.  Also, the cost of transportation begins to play a role.  Take a look at the table in this article.

People who read this space regularly might recall this table because it’s been used to make a similar point before.  The cost of transporting a cargo container increases with the cost of fuel.  So it stands to reason that the cost of transport increasingly becomes a factor as fuel prices rise.  And as a vendor compares the opportunity cost of being there with the exact goods for the customer with the cost savings of manufacturing abroad, at some point you reach an equilibrium.

To write this article I checked with the Energy Department’s Energy Information Administration (EIA not to be confused with the IEA, a similar body run from the European Union).  According to the EIA, The average U.S. cost of diesel fuel on December 3 of this year was $4.027.  So according to our table, the cost of moving a cargo container from China to New York is inexorably rising to the $10k mark.  Except for occasional economic weakness, don’t expect fuel prices at 2000 levels ever again, this is a one way shift which makes the change inevitable at some point.

You could also compare the cost of moving one fairly bulky PC with the cost of moving many more (and smaller) handhelds and tablets and realize there is more profit opportunity in moving these global platforms, especially considering that they are more standardized and not subject to the same customizations larger devices offer.  That means delivery is a less critical issue, as long as there is inventory, a few days on the high seas more or less doesn’t mean much.

And while we’re on the subject, have you noticed how many vendors have brought all-in-one PCs to market for the coming year?  The all-in-one is best exemplified by the iMac, the first computer without a separate system box, everything is built into the screen.  The all-in-ones make life easier for customers by at least reducing the spaghetti of cabling behind the boxes (and it should have been done a long time ago), but the new configuration, in addition to being more pleasant to look at, also costs less to move from factory to customer.

All of this points to the slowly advancing energy and transportation crunch that is inspired by high fuel prices, a consequence of peak oil.  When combined with climate change and the destruction caused by storms like Sandy — which we must not too closely associate with global warming lest we offend some group of recalcitrant unbelievers — we begin to see the outlines of ways to bring to market new products and services designed to take advantage of these realities.

Where was it made, when can I have it, how long does it take to get here, how much carbon is emitted in its production and other considerations, are not questions typically associated with CRM but they are increasingly the differentiators that people pay attention to when all other considerations are equal.

These differentiators are not easily seen or benchmarked, as would be clock speed, storage capacity or memory.  But they are another example of things that can be discovered through analysis of big social marketing data.  The economy changes in subtle ways and as businesses and consumers we have to have ways to keep up even if the changes seem inconsequential.  That’s why we need analytics and social data and why they continue to be hot topics.

Rolling Out An Idea

Posted: December 5, 2012 in CRM, social marketing

Has the emergence of social technology been faster than the roll out of other advanced technologies like CRM and ERP and why?

I have recently been reading a dense technical book from 1990 with the improbable title (for CRM), The Rise and Fall of Infrastructures — Dynamics of Evolution and Technological Change in Transport, by Arnulf Grübler.  It’s a well researched examination of some of the social and economic trends that influence adoption of new transportation paradigms such as rail and autos.  But it also has some nuggets applicable to CRM today.

I have lately wondered if our industry has speeded up in adopting innovation.  That was my hunch, and I am pleased to say that Grübler confirmed it.  His book was published in 1990, well before so much of what we take for granted such as the ubiquitous Internet and social media, were even close to business reality.  But it has a lot to say about those topics even now.

Grübler quoted other researchers and sources, most notably, Everet M. Rogers and his 1962 book, Diffusion of Innovations.  It is hard for me to say definitively, but many of the ideas from Grübler and Rogers appear to have found their way into our consciousness through popularizers such as Geoffrey Moore and Clayton Christensen.  That’s not to discount Moore’s and Christensen’s work; it is only to show that their ideas spring from deep sources.

Interestingly, while they and we are familiar with the bell curve segmentation of innovation adoption (Early Adopters etc.) the original concept of adoption was actually that of diffusion, as in the diffusion of an idea through a market or social network.  I think we lost something when we began thinking in terms of adoption rather than diffusion.

The change represents the commercialization of an academic idea and the concept became one of vendors persuading adopters and we lost the connotation of a natural rhythm.  The concept of diffusion carries with it the idea of a rate by which adoption takes place by more or less organic means — someone you trust gives you an idea that you validate for yourself and later you may influence others just as you were initially influenced.

I found two ideas under Rogers in Wikipedia that I think are relevant to this discussion.  The first one defines three types of innovation-decisions (my comments in Italics)

  1. Optional Innovation-Decision — made by an individual who is in some way distinguished from others in a social system.  This individual might be the “cool” kid in school that everyone wants to emulate, such as the quarterback or someone who has distinguished him or herself.  It could also be the class rebel.  When this kid does something, others take it up to be like him or her.
  2. Collective Innovation-Decision — made collectively by all individuals of a social system.  It is hard to distinguish this as a cause or as an effect of the decision above.  When “everyone” is doing something, the original seed crystal — the cool kid — might be lost to history.  Regardless, this decision appears to be a driving force behind exponential growth of an idea.
  3. Authority Innovation-Decision — made for the entire social system by a few individuals in positions of influence or power.  This is typically how big organizations buy and why salespeople try so hard to reach the C-level.  When the idea becomes institutionalized, i.e. everyone has to have it and the adoption is taken over by management.  This is especially noted in business adoption of large or expensive systems such as CRM.  Social media is right at the interface of a Collective Decision and an Authority Decision.

The second concept defines the intrinsic characteristics that influence an individual’s decision to adopt (or reject) an innovation.

  1. Relative Advantage — How improved an innovation is over the previous generation.  Vendors of new category items always score high here because there’s little to compare with.
  2. Compatibility — The level of compatibility that an innovation has to be assimilated into an individual’s life.  In software this issue is often dealt with by the CIO who can over rule a purchase if it conflicts with the established order.
  3. Complexity — If the innovation is perceived as complicated or difficult to use, an individual is unlikely to adopt it.  Departmental buyers often have the say here, even after a purchase as anyone who has ever tried to get sales people to use a difficult SFA package knows.
  4. Triability — How easy an innovation may be experimented with.  If a user is able to test an innovation, the individual will be more likely to adopt it.  SaaS and subscriptions have a big advantage here, no wonder they are in the ascent.
  5. Observability — The extent that an innovation is visible to others.  An innovation that is more visible will drive communication among the individual’s peers or personal networks and will in turn create more positive or negative reactions.  We use case studies to fill this need but also, late adopters need good observability to make a positive decision.

We see much of these five characteristics woven into sales and marketing strategies aimed at helping a new idea become diffused in a market.  In fact if you take these five characteristics and apply them to the bell curve of adoption —including Innovators, Early Adopter, Early Majority, Late Majority, Laggards — you can reasonably show a one to one correlation demonstrating these characteristics as the dominant features for an adoption (or diffusion) phase.

If you apply this knowledge you can begin answering the question I posed at the beginning, namely, has our marketplace speeded up somehow?  I say the answer is “yes” in large part due to social media.  What’s interesting to me is that social media  is also the best mode of promoting itself to the marketplace.

As an innovation decision, social began as an Optional-Innovation Decision.  Recall that only kids at Ivy League colleges were able to join Facebook initially but then the phenomenon quickly spread to other schools (a Collective-Innovation Decision).  When Facebook and other social technologies let down their barriers to entry the rest of the market, from high school kids to adults, joined in to the point that if Facebook were a country it would be one of the most populous on the planet.

But, back to the speed up.  It took, by my estimate well over a decade for CRM to become mainstream.  If you go back to the first release of ACT! in the mid-1980s to 2000, the year that Siebel’s revenues surpassed the $1 billion mark, it took about fifteen years for CRM to become prominent. By 2002 Siebel (founded in 1993) was cresting because of persistent rumors that it was hard to use (the Complexity characteristic).  Also Salesforce was out flanking Siebel with the Triability characteristic of its SaaS model.

Now take a look at social.  The signal event of the social revolution in the front office is the fourth edition of Paul Greenberg’s magisterial study, CRM At The Speed Of Light, published in 2009, just five years after Facebook was founded in a dorm room at Harvard.

So as we turn the corner into 2013, we can look back on a very rapid adoption of social media, and it’s not an illusion.  It happened in part because the medium became the message in the same way that Marshal McLuhan described TV.  But more to the point, as a network, social had the advantage of bi-directional communication and instant feedback that TV never had and that only accelerated things.

What this rapid adoption, thus far, says about the future is somewhat puzzling.   Social adoption is now at the level of an Authority Innovation-Decision but at the same time, entrepreneurs continue innovating on their original innovations and popularizing them through the same channel that has already demonstrated a propensity for truncating adoption and refining innovations with record speed.

But innovation is proceeding down numerous smaller pathways as we discover more uses in segmentation, sentiment and all the other ways there are to analyze customer and market behavior.  Will these permutations drive a round of complexity or will vendors skip over that and drive Triability and Observability?  They will if they’re smart but maybe they all don’t read my column.  Ha!

Still Time To Vote For CRM Idol

Posted: December 4, 2012 in CRM

What are you waiting for???  Just click this link and you’ll be in business.  You only have Till COB on Friday so don’t procrastinate!

You’ll be happy you voted.

The headline from yesterday really caught my eye: “Gartner Says by 2014, 80 Percent of Current Gamified Applications Will Fail to Meet Business Objectives Primarily Due to Poor Design”.  It immediately brought me back to that old chestnut from CRM’s salad days half of CRM implementations would fail.

It’s not that the prediction is wrong or that it’s not backed up by research, it’s that the notion in the headline leaves me saying, “And?”  The and is the interesting part and the press release on which the report is based goes into some detail that suggests that the authors are on track and that there’s time to do something about this canary in a coal mine.  This para from the PR summarizes the problem,

“The focus is on the obvious game mechanics, such as points, badges and leader boards, rather than the more subtle and more important game design elements, such as balancing competition and collaboration, or defining a meaningful game economy,” Mr. Burke said. “As a result, in many cases, organizations are simply counting points, slapping meaningless badges on activities and creating gamified applications that are simply not engaging for the target audience. Some organizations are already beginning to cast off poorly designed gamified applications.”

Yup, that’s about right and I would say it’s also tres, tres typical for an emerging market.  First you get the mechanics right then you work on the substance.  I think that by 2014 the twenty percent who survive will have moved on to substance.

You know, that paragraph describes nothing as well as it does the airline industry and its obsession with frequent flier miles.  Sadly, those programs have been around a long time and have failed to deliver much real value so that makes me skeptical of the 2014 assertion.

Your whole status in the airline programs is wrapped up in a badge that gives you absolutely meaningless rewards like getting on the plane earlier.  But as soon as you spend the miles you’ve built up you lose your status.  You are no longer as valuable despite your demonstrated loyalty.  It should not be that way.

Airlines are a great example of failure at “defining a meaningful game economy.”  If I was an economist looking at frequent flier programs I would conclude that all of the programs are in a recession driven by hoarding.  I know too many people who are wrapped up in the idea of making it to the next level of a program as if they were playing PacMan or something.

Few people spend their rewards because it involves losing status.  But I bet the airlines like it that way.  As long as the points stay on the books, they are an unclaimed liability and some airlines have taken to “rewarding” dormant or semi-dormant accounts with magazine subscriptions to clear those liabilities.

You can’t have it both ways.  If your game economy involves a reward beyond the meaningless badges everyone throws around, them there has to be a redemption mechanism that won’t diminish status.  One’s status should not be held hostage to redemption.  A loyal customer or one with demonstrated expertise is intrinsically valuable and such customers should be exalted and, of course, this goes way beyond frequent flier programs.

I just got a check from Costco rebating me two percent on all of my purchases for the last year.  Two points doesn’t sound like a lot but it paid for a heck of a Thanksgiving.  I am loyal to Costco but mostly because I get good service and good prices every week.

A few years ago, I gave up on frequent flier points.  I used up all of my points flying first class until there were only enough left to get some magazines.  Then I switched airlines for better service.  Now I have to pay to check my bag and I get on the plane with the rest of the plain old citizens and I don’t mind.  I actually found it insulting as an American to have to walk on this carpet but not that one as my miles status fluctuated.

My point is that a sub-par service will only be helped so much by gamification and the rewards have to be meaningful, which is what Gartner is saying.  For all the people with a gazillion miles flying religiously on an airline that treats them like dirt, there are some intrepid souls who still shop for deals and quality.  So the danger with gamification isn’t that the approach will die off, it’s that vendors might hide behind their games thinking they are doing better than they are, and that’s the beginning of serious business problems.

I Already Voted — Did You?

Posted: November 26, 2012 in CRM
Tags: ,

All year, it seems like, we’ve been running CRM Idol, the contest started by Paul Greenberg to identify hot emerging companies in the greater CRM space.  We are now down to voting for finalists and this is where you finally get the chance to make your ideas known.  Time to vote.

This year’s crop of contestants, and especially the finalists, was exceptionally strong.  These companies are all well deserving of the venture capital that they’ve already raised as well as what will be showered on them after the voting is over.  We could tell right away that this year’s crop was a cut above last year’s — and they were pretty special, too.  But the companies in this year’s contest really, really get it.  They are laser focused on social and its many tentacles into CRM.

But social is not the only thing on the menu.  We’ve seen an impressive array of automation that goes from various forms of analysis to clever virtual agents.  So, when you vote think about all that and also think about how three of the seven finalists come from parts outside of Norte America.  That’s right, this is a global event these days.

So let’s get to it.  To vote go to the CRM Idol site here and please, s’il vous plait, por favor, puhleeze! watch the video that each company made to describe to you the business problem they solve, how they do it and what customers think of it.  Then read our judges reviews of each company.  Figure you need to spend about 30 minutes to do this job right and we need you to be conscientious about it.

Don’t worry if you can’t get it all done in one sitting, we know what it’s like to live in these distracted times.  But come back if you need to, make some notes to yourself.  Rule some out before making your final selection if it helps (just like taking the SATs).

So, go vote, it will do you some good.  It will show you where the market is moving.  It will also help some very talented emerging companies to sharpen their ideas and offers.  Most importantly, I’ve come to see Idol as the premiere community building activity in the front office.  You don’t see ERP vendors doing this, or HCM or any other branch of software (OK, maybe gamers have something equivalent but that’s not business, it’s entertainment).  It’s one of those things — like Dreamforce — that makes CRM such a hip and vibrant place to hang your hat.  Click here to get going. 

Thanks! Gracias! Prego! Much obliged, pardner.

I tried to wait a bit before commenting on the election and the Social CRM implications partly out of respect and in part to give everyone a chance to rev down.  And these observations have much more to do with social media than with any political party or policy initiative, so please believe me when I say I come in peace.

According to the New York Times the major candidates and their surrogates spent over six billion dollars on the presidential campaign making it the most lavish in history, if that’s the right word.  If you live in a swing state you were hammered by ads, many financed by big Super-PAC donors.  But looking at the results, especially for big donors as reported again in the Times, the results were paltry.

So what happened?

Very simply put, we began hearing the words, “micro-targeting” on election night.  The specific reference was to social media, data capture and aggregation and using analytics to both build models of “ideal” voters and then to find them and get them to the polls.

Mobile technology was also employed giving field workers maps and walking directions to the homes of their best-case voters.  This get out the vote part of the campaign proved critical to the outcome.

Finally, if you are Nate Silver, the statistician and blogger for the New York Times, you have to be feeling pretty good at this point.  Silver predicted the outcome precisely only making a wrong call on a North Dakota senate race that turned out better than he’d predicted.  Call it the triumph of the nerds if you must.

All of the modeling, analyzing and grouping that we’ve seen in conventional marketing over the years got a turbo boost from modern technology this year and it bodes well for both the public and private sectors.

In the private sector, social techniques have been validated on a major scale.  If you are not embedding your marketing with social technology and most importantly social techniques you no longer have a reason to wait.  Notice I said techniques too because research I’ve done recently shows too many organizations using the technology but clinging to old techniques with miserable results.  For instance using Twitter or Facebook to simply broadcast an unfocused message.  I wrote about this in my first book, “Hello, Ladies!” That has to change simply because using the new technology with the old methods yields mush.

On the public side, I am going out on a limb.  It’s conceivable that the six billion bucks just handed over to local TV and radio might prove to be a high water mark.  Micro-targeting is far less expensive and more effective and I think the era of big advertising is over in politics as it is in business.

Also, I think the technology from the general election will, four years hence, be cheap enough to penetrate the primary process even more than it has.  Further use of this marvelous technology will actually reduce the polarization we’ve experienced in the last few election cycles.  Here’s why.

In primaries it’s widely known that candidates run more to their extremes, Democrats are more liberal and Republicans more conservative.  The reason is simply that primary voters tend to be more passionate about their beliefs, you almost have to be to go out to a caucus for a relatively unknown candidate on a cold January night in Iowa.

Old broadcast techniques can reliably drum up the most passionate partisans to go to primaries and caucuses but with the down side that candidates win by being less mainstream and it’s the mainstream that votes in the general.  The Obama campaign understood that this year.  With no primary to engage in, the campaign maintained a centrist position, which was enough to win the general.  Micro-targeting worked well enough to enable the president to win all but one swing state, which turned out to be his margin of victory.

So this election was a great proof point for social both in its theory and its practice.  And not just the social media that many people are familiar with.  It was a big win for analytics and modeling, which means big data too.  We tend to forget about analytics and too often when we think about big data at all it is in line with storage needs, but that is changing.

Finally, this election gave a big though implicit nod to cloud and mobile technologies.  As mentioned above mobile devices in the hands of field workers made them far more effective.

In 1952 the fifth machine of the UNIVAC I series was used by CBS to predict the result of the 1952 presidential election.  With a sample of just 1% of the voting population it correctly predicted that Dwight D. Eisenhower would win.  It was a watershed moment for the information age.  It would take more than a decade before computing started to become ubiquitous but it spawned everything around us today.

This election was just as important but its significance may be leaning in the opposite direction.  Rather than telling us of a new computing trend forming, its real message is the full bloom of the trend that started all those years ago.  And its lesson is that computing is so embedded in our lives today that attempting to live without it is like a return to a world lit only by fire.

Is Customer Service the New Marketing?

Posted: November 12, 2012 in CRM



Is Customer Service the New Marketing?

In today’s Yelpified-social media saturated world, consumers have become increasingly numb to traditional marketing efforts. This trend has caused diminished returns for advertising, PR and other marketing methods, while word of mouth and customer  recommendations increase in value.

So, are we nearing a time when investing in a Zappos-level of customer service will become be seen as better spend for the marketing dollar?

Beagle Research Group CEO Denis Pombriant will explore this question later this month with a panel of experts in a live online debate. Software Advice is hosting the event in a Google+ Hangout. 

The group will answer four scripted questions before the discussion is turned to the audience. The questions include:

  1. Zappos is widely recognized for making customer service central to their culture. Leadership sees support not as a cost, but as an opportunity to market through personal connections with customers. This success is largely attributable to customer loyalty and word of mouth. So based on this, is customer service the new marketing?
  2. And where doesn’t this work? Who shouldn’t slash marketing budgets and put the customer first at all costs?
  3. What do we have to do to make this happen? What do companies have to do to implement such a monumental shift in strategy and culture?
  4. Clearly this is a strategy that pays out over the long term. How can a business measure this shift to ensure they are getting the right return on their shifting investment and priorities? 

 The event will take place on November 28 at 1 p.m. CST. Add Analyst Ashley Furness (the moderator) to your circle on Google+ and she will send you an event invite with more details.