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As you will have noticed, I haven’t been writing much lately. The reason for that is that I spent time with my mom, who passed away on New Year’s eve. I was fortunate enough to spend quality time with her while she was in the hospital, to say my goodbyes, and to hold her hand as she passed. For those who know me, you know that she played an important role in my life. For those of you who met her, I am sure you will agree that we lost a remarkable person.

The memorial service is in a few hours, and here is what I plan on saying (translated from French):

Mamantje, that is how I called my mom, we will miss you. On the one hand we cannot complain. Just as I was telling my son, who loved his grandmother, we get sad when people leave us too early, or when they suffer too much. Neither one of those was true for my mother. She had a beautiful life, she did not suffer, and she was able to say her goodbyes to (almost) everyone – she was able to leave us without having any unfinished conversations.

Of course, it is also hard to say goodbye to someone you love so much, especially someone with whom your relationship was built on unconditional love, like mine was with mom.

You will remember my mom for various reasons – but also for common reasons, like her sense of justice, her sense of humor or her strong will to live life fully. We were able to witness examples of all those characteristics throughout her final hours. Like when she got feisty with a nurse who was treating her unjustly, or when she told us not to worry about the back of her head when we washed her hair one last time – explaining that you face God in front and that he could care less about the back of your head. Or when she found the strength to communicate with us all the way to the end, long after the doctors had told us that she had moved on to a different world.
Me, I will remember my mom for three reasons, reasons that have guided my life:

• Her insatiable hunger for knowledge – she could not get enough, she was a permanent student of everything that went on around her, and also of the history that preceded those events. I remember buying her books that gave her headaches and that forced her to buy special dictionaries to understand them – she just loved it. She also loved travelling; especially making what she called cultural trips, for the same reason.
• Her determination and her strength of character to achieve her goals. She was very little when she lost her mom, and very young when she decided that she would become “Somebody (une Madame)” with a nice family and children. She lived her life without ever deviating from that course – and she approached everything she did with the same determination.
• Her love: for her, it was just as Jacques Brel used to say. In her world, love reigned and she was the queen (and sometimes also the benevolent dictator). She understood, long before Paul Coelho said it recently, that when love rules, power disappears, but when power rules, love disappears.

Mamantje, we will miss you…tremendously. And like Francis Cabrel said so nicely in songs that you used to love when I played them for you since I was 18-20 years old, for me you have always been a Star in your own right. I hope that you will now take your place among them in the skies.

There has been a lot of research on the value of acquiring a customer though Word of Mouth versus Traditional Marketing. One recent project, which was published in the Journal of Marketing this past September, found that the long term elasticity (defined as the percentage of change in new customer acquisition to the percentage of change in the corresponding marketing driver) for Word of Mouth is 20 times higher than the elasticity for for events and 30 times higher than the elasticity for media appearances. Another study, this one from last year, found that the lifetime value of a customer acquired through word of mouth can be twice that of the lifetime value of a customer acquired through traditional marketing. And they can bring in twice the amount of additional business through their own positive word of mouth compared to those who were acquired through traditional marketing programs.

There is no question that customers who are acquired through word of mouth will be buzzing more and longer than those who are acquired through traditional marketing means. Some companies are actually able to quantify the value of a word of mouth referral. Unfortunatelly, the knee-jerk reaction of many marketers who quantify that referral value is to use it to calculate the financial incentive that they are willing to pay to stimulate word of mouth referrals.

That is where the system breaks down.

If you give me a pure financial incentive to make a referral, I will evaluate whether it’s worth spending some of my social capital for the amount of money that you are giving me (and chances are it won’t). As Dan Ariely calls it, I will evaluate the referral transaction in my market framework. If you do not give me any financial incentive, I will evaluate making a referral in my social framework (e.g., I am actually helping the person who I am referring this product or service to? Or I am helping the company person who was helpful with me in dealing with my problem by bringing her more business?). While there is no research data that I am aware of to back this up, I believe that the financial incentive-based word of mouth will look a lot like traditional marketing-based customer acquisition programs – resulting in a lot less buzzing and lower customer lifetime value.

Now what if you were putting incentives in place that were social in nature rather than financial. Don’t give me an incentive that would trigger the evaluation of what I do in a market framework, but allow me to give a valuable gift to the person who I am referring to you. If I like your offering and you increase the value that I deliver to my friends or colleagues by referring them to you, then you have a winner.

The key to success is not by commercializing the social – it’s by making the social stronger.

What do you think?

(via 9GAG)

I’ve been a long time champion of Don Peppers’ work and so it was especially fun to conduct this CMO 2.0 Influencer Conversation with him. Don is the co-author of eight books, his latest one being Rules to Break and Laws to Follow, and he is also the co-founder of Peppers and Rogers.

We started off by having Don give an overview of his latest book, which came out last year. At a high level, the book deals with the evolving landscape of business competition and the changes that are caused by the rise of social media – with customers increasingly talking with one another.

In it, Don and his co-author Martha Rogers argue that while businesses operate under a set of assumptions that sound logical, they are, in fact, fundamentally flawed. And, as the title of their book advocates for, it’s these rules that need to be broken.

The first one is that the best measure of success for your company is current sales and profits. They think that this is a false assumption because customers don’t just buy things from you today. When they do buy things they also have an experience that changes their impression of you or their affection for you, which in turn changes the likely amount of business you’re going to get (or not get) from that customer in the future. So, the customer lifetime value goes up or down based on current buying experiences, and that is the metric companies should track – not current sales and profits.

The second rule to break, or false assumption that companies operate on, is that with the right sales and marketing efforts you can always get more customers. In reality, they argue, we have a surplus of products and services, and a shortage of customers – customers are the new scarcity and should be thought of as a productive resource the same way we think of capital or labor as productive resources. You cannot just get more customers with more marketing – there is a limit. Note that Don and Martha are not attacking the whole notion of customer acquisition, they just don’t think that it’s the only way to create value. The other side of this coin is that capital is an infinite resource – you can always get more capital.

The third rule to break, also widely accepted as truth by most businesses, is that company value can be created by offering differentiated products and services. Products and services don’t create value – customers do when they buy those products and services. Customers create value in two ways. Short term, by buying products from you now. Long term, by buying more from you later and by creating additional business for you through their referrals. So you should think of customers as productive assets.

Don then talked about a new customer-based metric that companies can use to measure the efficiency with which they are using customers to create value – Return on Customer. Return on Customer is very analogous to Return on Investment. If I have a customer who has a lifetime value of $100 and I make $5 in profit on that customer by selling him stuff during the year, and by the end of the year I’ve been able to increase his lifetime value to $110, then my Return on Customer is 15%.

We also talked about customer acquisition strategies and how you need to evaluate the total customer lifetime value when you prioritize which customers to attract. The least valuable customers come in for the most valuable offers – so having a customer acquisition strategy focused on discounts is not exactly the smartest thing to do. Research that we found as part of research for our own book, about which I will blog about separately, showed that customers who are acquired through word of mouth have not only a higher lifetime value than those acquired through traditional marketing programs, they also bring in more new business through their referrals. So, when you calculate customer lifetime value you need to include the business that will come to you because of a customer’s positive word of mouth. That is especially true in light of other research that Don mentioned, which shows that your highest spenders are not always your highest referrers.

We then talked about another important topic in all of Don’s writing – trust. Customers make most of their buying decisions based on trust, and they think that you are creating the most value for them when they trust you. So if you want to maximize the value your customers create, you need to focus on earning and keeping their trust. And you cannot have a trustworthy business unless you trust your employees.

We closed our conversation with a discussion around the evolution of CRM, and how CRM systems will have to start incorporating people’s social profile, not just their buying history with the company. Don also warned that if companies think of their CRM system as a tool to sell more things, they will fail. CRM systems should be put in place to create more value for the customers – create better offers, better delivery, or whatever will increase value for the customer.

Don had an interesting parting piece of advice for marketers:

…in the era of social media you should always step back from whatever marketing policy you’re considering, whatever kind of new idea you have and ask yourself, ‘Gee, if this became public, would it be an embarrassment to us? Would we be proud of it? Would some of our customers hold it against us?’

Because, you know what? It’s a really good chance it will become public in today’s age and if you want to protect yourself then you really have to have clean hands, not just a good alibi.

Other things we discussed include:

• How trust is a combination of intent and competence
• The impact of technology on corporate hierarchies and processes
• How successful companies of the future will have a high degree of self-organization
• The importance of culture in successful companies
• How the most influential customers don’t want to be sold to

As usual, you can listen to the podcast on the CMO 2.0 site.

For those who cannot see the clip and want to see the commercial , click here.

Information channels stop working when the customer is collaboratively involved in the delivery of the message. When that happens, the message (and sometimes the definition of the product and its value) changes as it is propagated through the network. Moreover, some customers will be more “important” than others, due to their location and status in the network. The message may also change in response to what the network feels the message is, or should be, or simply because of the typical sharpening (the emphasizing of what the speaker considers the gist of the message) and leveling (the de-emphasizing of those pieces considered less important) that happen to messages when they travel through networks made up of humans 1.0. Accordingly, the message might have to be clarified by the company or another interested human, or the actual propagation might force a review of what the desired message was or should be. What’s the upshot of all of this uncertainty? One clear answer is that discrete business “channels” are an endangered species.

In a networked world, where your customers, potential customers, and detractors are all nodes equally visible to every other node, there is no such opportunity for the company to control “the channel” as they might have in the past. In a Hyper-Social environment, where you don’t know who will be participating in the conversation until the conversation actually begins, it is impossible to create separate pathways where you can message a retailer, a customer, or a business partner.

That being said, you need to be aware of the topology of the networks that exist within your tribes, as differences among them call for different approaches. In some cases you will have very tightly connected members at the core of you network with others at the fringes that are less connected; in some cases you may have more evenly distributed networks; or you may even have networks that have ring networks inside of them. The tribal network characteristics will determine where you might want to position yourself within the network (if they allow you to become part of it) and how to most effectively have your content travel through them. In some cases you will want to target the members who are the most connected at the center of your network, and in some cases you will be better off by targeting those who are loosely connected to them. You should also understand the nature of the social bonds and leadership structures that exist within your Hyper-Social networks. If the leadership does not rotate on a periodic basis, or doesn’t allow for newcomers to achieve status within reasonable amount of time, that is a problem. The type of bonds that people have with one another is also an important characteristic. In certain environments, such as sites with product reviews, connectedness is not all that important, but status might be. In other environments, where people are helping one another in the context of complex problem solving, connection is an important factor that will determine how knowledge flows within those communities. In all cases you will need to gather network characteristics for active lurkers – the largest and potentially most influential participation group within your community. They are those who participate and share information with others, but do so using different channels (phone, face-to-face, or email) than the public community forums.

Another fundamental difference between channels and networks lies in what flows through them. Data and information flow through channels, whereas networks allow knowledge to flow. As John Hagel said when I talked with him: “unlike information or data flows, knowledge does not flow easily – as it relies on long-term trust-based relationships.”

There are two reasons why this is an important distinction to make – one for buyers and one for companies.

Besides the fact that as potential buyers we don’t trust the non-reciprocal communications that companies want to have with us through fixed interrupt-based channels, we turn to our trusted networks because we can gain actual knowledge about products and services – a commodity much more valuable than plain old data or information about them.

As for companies, they need to increase their external knowledge flows if they are to survive. When I spoke with John Hagel he explained how he believes that in this era of intensifying competition, we need to shift from a knowledge stock mentality, where you aggressively protect and hoard proprietary knowledge, build scalable offerings around it, and then extract value from it for the longest possible time, to a knowledge flow mentality, where you realize that what you know today has rapidly diminishing value and where you refresh your knowledge stocks by participating in knowledge flows. So the key to success in this new economic reality is to move from a transactional world to a long-term trust-based world. Examples of taking on a knowledge flow approach include letting your key customers participate in product innovation, or turning them into affiliates to allow them to help one another.

What do you think? As usual, I would be interested in your thoughts.

• American Airlines fires an employee for…customer engagement | Blog | Econsultancy
• Freedom to surf: workers more productive if allowed to use the internet for leisure : News : The University of Melbourne
• The Über-Connected Organization: A Mandate for 2010 – Conversation Starter – HarvardBusiness.org
• No News Here: Forrester Says Consumers Don’t Trust Corporate Blogs | Debbie Weil on Corporate Blogging and Social Media

Some pundits will tell you that you should do away with brand messaging and positioning all together, since you cannot control it anyway. Not so fast! People need to know what bucket to put your offering in, and if they can’t, they won’t know how to assign value to what you have to offer. Tivo ended up in that pickle, with consumers not quite sure what category of products to compare the offering with. Was it more like a DVD player or was it more like a computer?

Knowing that a good positioning will impact your revenue and profits, and realizing that you still have a seat at the customer decision making table (it’s just a much more crowded table and your share of voice has significantly been reduced) you need to develop a point of view about your positioning and try to get it co-opted by your tribe. Like in most social interactions, your chances to get someone to adopt your point of view are going to increase if you involve them early on. The more say you give them in the process of co-creating your products and services, and the earlier you get them involved (preferably at the product concept stage) the more they will embrace a shared view of the brand and product positioning. An added benefit of co-creating products with your customers is that those who are involved in the design of new products will typically pay higher prices for those products .

Marketing executives have come to understand, sometimes the hard way, that brand perception is only as good as the last interaction the customer had with it. When I spoke with Mark Colombo, senior vice president of digital access marketing at FedEx he described the challenge as follows: “In the 50’s and 60’s, brands used to be built on a set of attributes. Now brands are built by customers, one experience at a time, and those experiences are, obviously, more and more online experiences.” So you cannot just convey a brand’s promise or a product’s positioning through advertising and packaging anymore, you also need to deliver against that promise across all your other customer touch-points, and at any time. That becomes especially challenging when you have complex product distribution channels, high numbers of people involved in your service delivery, or a high level of interaction between your customers and your customer service and support center. It gets further complicated by user generated touch-points that people will encounter in the form of online reviews, blogs, and online communities. All those touch-points can make or break your brand, product, or service promise and position. Like many other things in marketing, this is not something new; it’s just something that we used to get away with because our customers, prospects and detractors could not behave Hyper-Socially and hold us accountable for our actions.

The way you control a brand promise through multiple touch-points is not through elaborate process manuals that we have grown accustomed to in business. The way to do it is by embracing Hyper-Sociality and all the messiness that comes with it and allow all the people involved in the process to behave like humans. Some companies like Zappos and JetBlue achieve that through a shared values-based culture that creates a common sense of belonging among their employees. Others like Western Union achieve it by becoming customer-centric to a fault. Still others, like IBM, are doing it by encouraging all their employees to set up communities with whomever they want, wherever they want, and about anything they want.

The key to success is to embrace all four tenets of Hyper-Sociality: think tribes, knowledge networks, customer-centricity, and be willing to accept some of the messiness that comes with Hyper-Sociality.

What do you think? I would appreciate your feedback.

• @kencamp – I would love one in reply to kencamp #
• @SherylBreuker @kencamp – thank you both! #
• (for me too – we need an insomniac community) RT @jhagel: Hope for me – drugs may save memory of sleep deprived http://tinyurl.com/yg4fug6 #
• funny how I have been anti-social while finishing a book on hyper-sociality….happy Halloween everyone #
• @SherylBreuker – just got the invite, thank you! in reply to SherylBreuker #
• lurking is a style of participation in communities that has value – http://bit.ly/3pmK4P #
• @mbjorn fascinating, how "active" lurking is the dominant form of participation in communities in reply to mbjorn #
• @thebrandbuilder @WesternUnion @bdengland @ariegoldshlager – thanks for RT, that was actually a real fun CMO 2.0 Convo http://bit.ly/4udtTL #
• do we still need messaging and positioning? #
• Ouch…I now have 66666 unread emails in my inbox…isn't that an evil number? #
• do you know of b2b product examples that were launched with a particular positioning only to have users change it and use it differently? #

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My CMO 2.0 Conversation with Gail Galuppo, the CMO at Western Union was both fun and refreshing. Talk about the challenge of being in charge of a legacy brand that totally had to transform itself, with the added complexity of serving 15,000 distinct customer communities. Not an easy task, for sure, but one that Gail and her team seem to enjoy thoroughly.

As usual we started off with Gail giving us some context by describing her background. In her case, she learned to put the customer at the center of all decision making while being trained on Six Sigma at GE Capital. She then had a career that took her from financial services to retail and back into financial services and which allowed her to experience various places worldwide. At Western Union, she deals with offices in 202 countries and 400,000 retail locations – six times as many retail locations as McDonald’s, Wal-Mart, Starbucks, and Citibank combined. Talk about a challenging footprint to deliver a consistent brand experience worldwide. As mentioned earlier, they serve 15,000 distinct customer communities, who behave very differently from one another – from Ghanaians in France, to Kenyans in the UK, Filipinos in Dubai and Guatemalans in the US – just to name a few. Their customers are work emigrants who send money back home.

The first marketing challenge we talked about was that of international marketing – how to operate as a global brand, while being relevant to your local communities. The job gets further complicated by the fact that even within their distinct customer communities, there are fundamental differences in needs, expectations, and lifestyles. A migrant from Puerto Rico who immigrated to the US 30 years ago has a very different lifestyle and other needs than one who’s in the country for 3 months or 3 years. And if you thought that was it – think again. They also need to appeal to both senders and receivers of money. With this many permutations and message requirements, nobody could blame you for having a marketing conniption. The way they resolve this seemingly insurmountable and massively expensive problem is in two ways – through a hyper-national brand campaign based on common consumer tribe attributes for all immigrants worldwide combined with a hyper-local set of programs focused on the separate customer communities within each country. Worldwide, their research found that the common attributes that binds all immigrant customer tribes together are pride, sacrifice, adventurism, dreams for their family members, positivity and can-do spirit. Based on that they created the Yes! campaign, the first global brand campaign for Western Union. At the same time they also continue to celebrate the differences between their consumer tribes by having hyper-local programs (like concerts with bands from their native country) that are led by people from those consumer communities – so for example, they have Chinese, Kenyan, and Togolese employees leading the local marketing efforts for those groups in France.

It would be interesting to see if you could harness this consumer tribal behavior into a true global online community. Members would be attracted to the community by what unites them worldwide and would remain in the community by what makes their own tribes unique. They could hang out in sub-communities with their own people and help one another get adjusted. Western Union could strengthen the relationship with their customers by recommending community-specific products, and services, and by providing advice. From a technology enablement perspective it certainly would work as 90% of their customers have cell phones and are over-indexed on the Internet – the community would have to have a strong SMS component to it.

Another interesting aspect of the Yes! campaign is that the primary audience for the campaign was not the actual customers, but the employees and the Western Union partners who operate the storefronts.The effort, called “Project Galvanize,” was actually meant to change the culture from one where people were thinking of customers in terms of transactions into a much more customer-centric culture. When you have 400,000 customer touch-points worldwide, it’s hard to deliver a consistent brand experience if you focus on the transactions rather than the humans and their motivations.

We also talked about the role of social media in the marketing mix. While Western Union is in the early stages of leveraging social media and communities as part of their marketing – they do have a initiative on FaceBook called World In Motion – they definitely intend on expanding that. They are monitoring what is being said about them in social media, but here too they want to take this to the next level.

Lastly we talked about growth – and whether they focus on expanding the array of services for existing customers, or look for new markets first. The answer for Western Union is both. They are coming out with a series of new mobile applications for existing customers and are also getting into the small business market – not just the generic small business market, but that part of the small business market operated by immigrants. A new consumer tribe that probably would thrive online as well.

I can totally see how Gail thinks she has the best job in the world.

Other things that we talked about include:

• The details of the Yes! campaign and how they measured progress and success
• The importance of a values-based system in managing all the possible agent scenarios worldwide
• The role of customer analytics in marketing
• The importance of integrating marketing with customer service
• The challenges related to recruiting a true diverse workforce worldwide

As usual, you can listen to the podcast on the CMO 2.0 site.