The past two months have been spent in caring for my mother-in-law.  This has involved living in the Philadelphia area for an extended period, a hectic but pleasant Christmas and more than sufficient time to think about what goes on about us while we are doing “work.”

Here is the first of my observations, with others to follow:

The University of Pennsylvania Hospital has a new pavilion dedicated to dealing with sick people.  The facility, from top to bottom is superb.  Each examining room (on the floor we visited) is equipped with the requisite examining table, a desk area with stool and two chairs.  One chair is of normal size.  The other is 50% larger.

This larger chair started a chain of thought that went something like this…the U of P wouldn’t put in larger chairs unless they were needed, they are needed because people are larger, people are larger because of the quality of health care and nutrition they receive when they are young…no they are larger because they are obese. 

A visual observation of other patients (very non-scientific) reinforced my thought about the obesity issue.  There are a lot of sick, obese people in hospitals today.  Why are they obese?  Too many calories, not enough exercise.

Obesity has become an epidemic, and if not stopped will soon overwhelm our medical system with costs that could be avoided.  Some have called for taking away obese children from parents which they see as a form of child abuse. Certainly there is a precedent for Government action, as the Surgeon General was the power behind attempts to ban smoking.

My recommendation is less draconian and stems from my business background.  Place a significant tax on sugars (all types, cane, corn syrup and anything else that adds empty calories).  This will make high caloric sugar based items more expensive, and the monies raised can be used to offset the increasing costs of medical care.

In the 1700s, all that was available was refined cane sugar.  It was so highly prized that it was kept under lock and key and taxed.  Per capita sugar consumption, along with obesity, Type II diabetes, hypertension and other related medical problems was low.   In the 1700’s the average Englishman consumed about 4lbs of sugar a year.  Today it is estimated that the average American will consume over 150lbs of sugar a year.  I don’t think our bodies have evolved over the past 300 years to accommodate change of this magnitude.

As with all simple recommendations, this one doesn’t stand a chance due to the significant lobbying power of the food producers who will see their profits plummet.  Others will say that it is a regressive tax on the poor, for if they want to eat sugar, it will cost them more as a percentage of their income than the rich. 

To the food producers and lobbyists I ask, how do you sleep at night knowing that you are killing people?  To those concerned about the tax inequality, how much are you willing to be taxed in the future to pay for even higher medical costs?

As you can see, sitting in an extra large chair, with time to think, took me down a path of advocating for significant taxes on sugars.  While this is probably an imperfect solution with unintended consequences, the alternative that is facing us as a nation appears much less palatable.

Your thoughts?

RHM 1/17/2012

PS  Wide seats have a larger impact than just in hospitals: http://www.nytimes.com/2012/01/16/nyregion/transit-agencies-in-new-york-area-consider-wider-seats.html?

Q4 is the usual time for pulling together plans and budgets for the following year.  In the past, I have written about the problems and issues that this process generates, but decided this year that a checklist might be of better use.

  __  Strategy, goals and objectives – Are the goals and objectives for 2012 articulated?  Is the strategy to reach these goals and objectives clearly spelled out, with priorities specified?

__  Budget and staffing – Is the budget for 2012, even at an approximation level, available?  Is the headcount forecasted to go up, down or remain the same?

__  Support groups – Are all the support functions (customer support, field services, product services, etc.) in line and capable of supporting the plans.

__  Events – Are all the major events/milestones known, i.e., new product introduction in Q1, major trade show in Q3, major partnership agreement in Q1?

__  Cost and profitability – For multi-product companies, are the costs, by product, going up, down, or remaining the same?  Will pricing remain the same or change?

__  Policies – Is there any need to change or modify customer facing policies or social media policies?  For example, has the current “Response” policy and procedure been effective?  Is the policy about employees discussing the company on Facebook and twitter clear and being followed?

__  Target market – Have you identified the target market?  Is it (audience) the same as it was in 2011?  Does it have the same segmentation?

__  Campaigns – Are there developed campaigns (strategies) to support all the marketing activities?

__  Marketing mix – Is the 2011 allocation of Marketing spend applicable to 2012?  For example, should more resources be devoted to social media, or to trade shows?

__  Tactical product pans – Will the 2011 tactical plan be effective in 2012?  Specifically is the “volume” product still competitive and profitable, is the “loss-leader” able to generate sales, and are there contingency plans in place in the event of competitive inroads?

__  Sales relations – Is there agreement on what constitutes a qualified lead?  Is Sales looking for additional support in the form of Product Managers?  Are Sales’ lost sales reports meaningful in helping to define the Marketing mix?

__  Social media – Which 2011 metrics have been the most useful to Management?   How can these be improved or expanded in 2012, and at what cost?  Additionally:

• Is this the year to redo your website?
• When is the last time you updated your SEO activity/measure?
• Do you have a content calendar with confirmed inputs for Q1, the year?
• Can you improve your utilization of content?
• Are you up-to-date on the latest Facebook, LinkedIn, and twitter changes?

This checklist is meant to be a memory jogger, as each company and situation is different.  The point is that in approaching the 2012 budgeting process without a checklist, key things can be overlooked or forgotten.  The importance of a checklist has been proven by pilots and doctors, and should be used by all good Marketers.  (See: The Checklist Manifesto: How to Get Things Right by Atul Gawande)

Have you constructed your checklist for 2012 yet?  How many items are checked off?  What other items would you add to this checklist?

PS.  If all this is confusing, you can find help in our Marketing Resource Optimizer (MRO) product.  Click here to obtain a copy of Part 1.

RHM  10/20/2011  

Typically companies go from a very simple organizational structure to some form of corporate or divisional or strategical business units (SBUs).

Start –ups or small size companies are typically managed by one or two people (entrepreneurs) who have the vision and passion to get things started. The environment is usually flexible, dynamic, has little in the way of processes or procedures and is freewheeling. 

Unfortunately when the company hits a certain revenue size or development phases, the entrepreneurial skills become secondary or more bluntly, other skills are needed to move into the next growth stage.

Skills like marketing, sales, or financial become critical for the company to grow.  Again it is more often than not that the original founder does not have the required skills for the next phase.

Here are examples what some call “crisis of leadership” that happens every day:

A small software company was started by a very talented engineer and their initial revenues came from personal referrals, which helped the company grow to a certain point , then the stall point happened and no one seem to know what the problem was. After close to a year of stagnation, a consult concluded that this company was not doing any marketing what so ever, mainly because the founder believed “if we make it, they will come”.  Eventually the founder hired a marketing person and gave her ownership not only for creating some marketing programs but developing the next wave of market development documents.

Another example is about an extremely passionate person who started a charity organization and again grew it to a certain “donation level” and once again things came to a halt. In this case the founder tried to do everything from fund raising to printing the next newsletter. The problem was no one knew who was responsible for what and what their contribution was, so most just sat back and waited for the founder to take action.  Again, objectives and goals were personal and not for the overall benefit of the organization.

A third example is about Larry Ellison and Oracle.  Larry Ellison has great vision and a passion for his company, but Oracle also hit a stall point, but in this case Larry saw he was part of the problem and hired some financial experts and he focused on the next innovations.

For those at the top, here are some things to avoid according to J. Hamm “Why Entrepreneurs don’t scale” Harvard Business Review.

1-Don’t be to loyal to your comrades

2-Don’t become too task and detailed oriented

3-Be careful of single – mindedness,   because this can develop into tunnel vision

4-Don’t work in isolation, leaders lead, do not hide

If you see any or all of the above situations within your company, I would suggest seeking some outside advice in order to get a third party’s point of view.

Remember, a management strategy is just as critical as having a product or service strategy.  Not having a strategy is like sailing a ship without a rudder.

RHL  10/13/11

 I stated that customer satisfaction is the responsibility of EVERYONE!

Everyone “touches “  the customer and how everyone performs their job relates to the customer being satisfied.  I also listed several steps for starting a customer satisfaction program within any company. Lastly, Marketing should always look at their activities from the customer’s “glasses.”

Several people asked about research on customer satisfaction and activities that a company can perform and linking it to either starting a customer satisfaction program or improving their current customer satisfaction program.   Well the answer is a definite YES!

There are a number of approaches, companies and experts on this subject, but they basically boil down to a relatively small number of activities that help improve customer satisfaction.

Fundamentally, customers (both B2B and B2C) are looking for value (see my posting on good value propositions) and value is benefit minus cost.    Given this basic premise, one can link activities that focus on benefits and cost, and if one improves on these activities it will result in an improvement in customer satisfaction and in most cases have a positive impact on the company’s revenue stream.

Two examples of this relationship are:  One, developing a quality product that addresses a customer’s critical issues, resulting in a perceived benefit and subsequent purchases of that product or service. (e.g. disposable diapers)  Secondly, by developing a great relationship with the customer base or creating a wonderful image of your company that will be viewed as a benefit to the customer and again resulting in a purchase of the product or service. (e.g., Apple, Disney)

Bradley T. Gale’s book titled “Managing Customer Value” talks about developing a matrix of attributes related to customer satisfaction consisting of “levers” that when improved will result in an increase to the benefit attribute or when levers addressing costs are improved will also increase the overall value and thus the potential for increased revenues.   The key point is incremental or small improvements in some or all of these attributes have a multiplying impact on the revenue improvement factor.    So just a 1-5% improvement in several areas can result in increased revenues.  

So, as I stated before, everyone can impact customer satisfaction and there are metrics that can be put in place that do not require a major undertaking to measure overall customer satisfaction AND increased revenues. 

Have you stated your customer satisfaction program; if not why not?

RHL 8/16/11

When customers look for value, it does not have to be just from the product or service but in how they are treated in the whole buying, selling and post sales process.

So who should own customer satisfaction?  Should sales own it? Should marketing own it? Should customer service own it?  Should the IT organization own it? Should your partners own it?

Let’s look at each group and see if they should be responsible for customer satisfaction.

Sales:  Well sales “touches” the customer every day, they are the ones who know what is going on with the customers.  So clearly it should be sales.

Marketing:  Marketing does the research on customer needs and pain points and develops the messages and branding that resonates with customers, so they should own customer satisfaction.

Customer Service:  Wait, this organization response to the customer’s requests. They handle the customer’s problem that no one else wants.  Clearly they should own customer satisfaction.

IT:  They are responsible for customer facing applications like call center answering systems, web site for users and order processing systems.  So, clearly they know the needs of the customer in order to make them satisfied.

Your Partners:  Hold the phones, most partners do some or all of the above functions so they really should own customer satisfaction.

Well, I would offer a different answer to the problem.  Customer satisfaction is the responsibility of EVERYONE in ANY company!

Everyone “touches “ the customer and how they perform their job relates to the customer being satisfied!   The developer of a product should develop something that addresses a customer need. The people in manufacturing should make sure that what is shipped is of highest quality and ship what the customer requested.  The call center person answering the phone should treat each phone call like it is the president of that company calling in. Sales and partners  should listen to their customers and address their needs and not selling them something they do not want. Marketing  should always  look at their activities from the customer’s  “glasses”.

So, what steps should you take to have all around customer satisfaction?    A customer satisfaction program does not have to be a very complex or a costly situation.  Here is a very basic form of a customer satisfaction program that one can get started quite easily and be effective.

Step One; Train each and every one within your organization on what customer satisfaction is and how every department has an impact on the results of good customer satisfaction.   Show them some case studies or examples of bad and good customer satisfaction situations.

Step Two, Create some posters or banners or have article about customer satisfaction in the company newsletter.  Have each group meetings or conference calls set aside a session about customer satisfaction.

Step Three, Have some one or small groups set up some goals and start collecting data on how the company is doing on creating good customer satisfaction on a regular basis.

Note:   There is actual real world data that shows that companies who have created some form of customer satisfaction program have not only improved customer opinions but have seen an uptick in net new revenues.

RHL 6/7/11

Value propositions are very important to business because if they are done correctly they uniquely define something that a company offers to their customer that addresses their need(s).  Unfortunately many marketing people and some senior management people are so close to their products or services that they actually feel their value propositions are compelling and that their customers feel the same way too.  In reality, value propositions are usually vague, do not address the customer’s issues and if you close your eyes you cannot tell one vendors values from another.

So what are great value propositions?  Well first let’s define a value proposition and what its components.

Wikipedia’s “defines a value proposition is part of business strategy. A value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where value= benefits- cost.”

Neil Rackham believes that a value proposition statement should consist of four main parts: capability, impact, proof, and cost.  I would add to this definition that it should have a differentiator

Investopedia states “a business or marketing statement that summarizes why a consumer should buy a product or use a service. This statement should convince a potential consumer that one particular product or service will add more value or better solve a problem than other similar offerings.”

Value propositions should address issues that are concerned with:

• Increasing revenues or market share
• Time to market
• Decreased costs
• Operational efficiency improvements
• Customer relationship improvements

Some examples of weak value propositions are the following:

            **We have experience

            **We improve your marketing

            **We offer training

            **My favorite, we are number one provider of XXXX (provider of what???)

Some examples of strong value propositions are:

**Our Automobiles will save you 20% on gas over all other cars

**Customer can save 65% with our home insurance versus any other insurance company

**Wal-Mart   “everyday low prices”

**BMW   “the ultimate driving machine”

Why are these good value propositions; because they address a customer segment needs, are compelling, and they definitely have value.

So ask yourself this, does your value proposition address what I call the customer’s pain points, are you resonating with them in the sense that you and your potential customers are talking about the same thing? 

Second, does the value proposition provide uniqueness/differentiation as compared to the competition?

Lastly, is there a real value (benefit minus cost) to the customer?

IF you cannot answer yes to all these questions, I would strongly suggest reconsidering both your messaging and value proposition statements

RHL
5/3/11

Table 2 in Verizon’s 2011 Data Breach Investigations Report suggests that data breaches occur frequently in relatively small companies.

Table 2. Organizational size by number of breaches (number of employees)

1 to 10                                        46

11 to 100                                  436

101 to 1,000                           74

1,001 to 10,000                   49

10,001 to 100,000 59

Over 100,000                       55

Unknown                               40

It may be that these smaller companies have not had the time to construct and test their defenses; hence they represent “low hanging fruit” to attackers either outside or inside.  Larger companies may be more attractive due to their size and potential, but they may also be much more difficult to penetrate.

Regardless of being large or small, it is worth noting that in today’s world there is a high probability that something bad will happen.  It could be an external hack, a social network mistake, or a concentrated effort by external groups to convince you to change your ways (See:  http://www.1goodreason.com/blog/blog/2010/05/19/nestles-social-media-meltdown-case-study/ )

The astute CMO understands that something bad will happen and consequently has a tested Marketing recovery plan in place.  Like an IT or Manufacturing/Operational contingency plan, the Marketing recovery plan swings into action when an “event” occurs.

For example, a small public hi-tech company might wake up one morning and discover that its intellectual property (IP) has been hacked.  Assuming that this might have a material impact on earnings, Management has the responsibility to disclose this information to the SEC and communicate it, in the best way possible, to shareholders and other interested stakeholders.

In a small company, how would this crisis be handled?  Does everyone know what to do?  Who speaks to the press, the SEC, investors, suppliers, employees?  Who instructs customer facing people what to say, how to gather responses, etc. etc.?

Having a tested recovery plan in place mitigates some of the immediate panic and uncertainty when an event occurs.  It certainly is not the time of “on the job” training.  As the voice of the company, it is the CMO’s responsibility to construct and test the Marketing recovery plan.  This includes getting Management’s buy-in on how a response is constructed and communicated.  Failure to act appropriately can severely damage a company’s image and tarnish brands forever.  Both the Chrysler-twitter embarrassment and Epsilon’s reaction/comments to its data breach have been criticized as to how they were handled. On the other hand, the Red Cross got kudos for how it handled a potentially damaging tweet.  See: http://mackcollier.com/red-cross-social-media-crisis-situation/

Does your company have a tested Marketing recovery plan?  Is the Marketing department prepared to lead the way when a crisis occurs?  Knowing that it is a matter of when, not if, an “event” occurs, shouldn’t you be prepared?

RHM  4/27/2011

Email is in a gray area.  As marketers we use it to generate leads, nurture potential buyers through the buying cycle and to keep our current customers up-to-date.  As recipients we know that much of email is SPAM, and have it blocked by corporate SPAM filters and often delete it from those that we do not know. We have been taught by to never open an email attachment from someone we do not know or to click on a download button…yet many of us do, often with disastrous results.

The ripple effect of incidents at RSA and Epsilon suggest that a seismic change to marketing’s use of email may take place.  RSA was breached and core information taken.  RSA has reported:

“The attack itself involved a targeted phishing campaign that used a Flash object embedded in an Excel file. The assault, probably selected after reconnaissance work on social networking sites, was ultimately aimed at planting back-door malware on machines on RSA’s network, according to a blog post by Uri Rivner, head of new technologies, identity protection and verification at RSA.”

What is surprising about this attack is that RSA employees, who should be knowledgeable about security, were taken in by it.  If they were spoofed, what is the likelihood that the average employee in your company will be taken in?

Epsilon was breached and thousands or millions of email addresses were taken.  Already some people have reported that they have received “spear-phishing” attacks, where the email appears to have come from a trusted source.

Trust is an earned value.  It takes a long time to get it and an instant to lose it.

If, in the past, we trusted email from Citibank, McKinsey, Best Buy or  Disney and now we cannot (their email address files were all taken from Epsilon), how can we believe any email we get from these sources, even if it is valid?  And, if we cannot trust these sources, why would we trust anyone else?

I expect that many CIOs and CSOs are putting together training packages for all employees that educate about spear-phishing, and emphasize the need to never click on a download button, or fill out a form asking for Personal Identifiable Information (PII). Where does this leave a marketer, who cannot include a newsletter as an attachment, and who will soon recognize that the download button is either stopped by the SPAM filter and is not being used?

Hopefully part of the CSO’s education package will cover how to identify domain names.  A valid domain name is http://www.firealarmmarketing.com/ where the firealarmmarketing.com comes before the second slash.  Anything else is probably a phishing attempt.  So, rather than use a “click-here” or “download” button, email marketers should use (as they did in the past) the URL for what they want the reader to do.  For example, I could say:

To learn more about Epsilon’s data breach see: http://firealarmmarketing.com/2011/04/06/the-lack-of-security-epsilons-data-breach/

(More information about domain names and understanding spammers can be found in this posting: http://www.bustspammers.com/phishing_links.html )

Going forward, fancy graphics and clever links have to give way to re-building trust among readers.  Additional steps that may be required are suggesting that the reader Google your company or brand, or that they type in your URL…which may mean shorter URLs and potentially fewer micro-sites.

Establishing trust is key in any relationship.  The Epsilon breach and its ramifications to email usage by Marketers are significant in that it damages an already tenuous bond.  Those Marketers that can establish and reinforce that trust will be successful.

Have you contemplated how you will change your email campaigns knowing that they may not be opened or that links may not be clicked?

RHM  4/12/2011

Two recent social media blunders, one at Chrysler and the other at Aflac, combined with the serious hack disclosed last week of RSA, caught my attention.  The social media blunders seem to be due to youth, inexperience and ignorance.  The RSA hack seems to be an example of a major league sophisticated attack.

What is going to happen to companies when the two forces, ignorance/inexperience and malicious sophistication combine in the social media sphere?

How does a company defend itself when a competitor steals credentials and posts a damaging comment on twitter or a Facebook page?  What protection does a company have regarding its Intellectual Property (IP) when an agency or an employee is compromised via a social engineering attack?  If someone can break into RSA, how hard do you think it would be for a competitor to get a copy of your promotional plans (or pricing, or customer list, or new product roll out, etc) and launch pre-emptive attacks?

That RSA was breeched reinforces the concept that everyone is a target and the question is not “if” but rather “when.”  As the CMO you have to ask and get answers to the following questions:

• Do all employees and agencies understand the concept and reach of social media?
• Have they been trained as to what is right and wrong?
• Have they been trained regarding social engineering?
• Are their consequences for failing to follow clear guidelines?  (In the Chrysler case the employee lost his job and the agency lost the account.)
• Does IT have the necessary tools and equipment in place to monitor and/or catch failures?
• Is there a response policy in place?  Has it been tested?
• Etc.

All public companies must adhere to the concept of risk mitigation as defined in the revised Sarbanes-Oxley law.  However, social media is moving too fast and the IT auditors generally unaware that the emerging social media exposure can present a material risk to a company.  As the CMO it is your responsibility to bring this issue forward.  Failure to do so, along with not implementing mitigating procedures, carries the risk of significant SEC penalties.

Do you understand the risks?  Is your firm safe?  Do you know how to react when an event occurs?  If you would like a review of your policies, procedures and training, contact us

RHM  3/24/2011

So if you are living in the old world where sales people knew everything about their accounts, where they provided the customer with all the “necessary information” and helped guide them down the path that eventually led to an order, you are in for an extremely rude awakening!

This old sales model is no longer valid, the selling company is no longer in control, and the potential end user/buyer is NOW in control.

There are many reasons why the sales model has changed and why you, as a vendor, should understand all the issues in order to reorganize your sales and marketing organizations to make them current with the today’s buyers.

One reason for this dramatic change is the Internet.   The world of information has been opened to the consumer (both B2C and B2B).  End users can research everything about a company, about particular products or services, about existing customer’s reactions, about any issues related to the company, the product or service and price.   The bottom line is that the end user is getting data and information about product and services how and when they want it, versus the vendor “spoon feeding” it to them.

So you have two choices, one you can keep doing things the way you have been and wonder why sales are not only not growing but actually declining.  Or, you can analyze the customer “domain” and modify your sales and marketing to be in sync with your existing and potential customers.

I will post some other issues that have caused the sales model to change, but in the mean time if you have any specific questions just ask them via Contact Us.

RHL 3/22/11