The Passion of the Entrepreneur

A few weeks ago the Tech Coast Angels of Orange County (www.techcoastangels.com)- a group to which I belong- held an open meeting which enabled would-be entrepreneurs to meet with about a half dozen of us angels.   We expected about 30 people to show up, yet we would up with more than 70 entrepreneurs attending.   Ray Chan and Stu Roberts of our group did a superlative job of arranging the meeting.

The entrepreneurs were very engaging and had extreme passion.  Recognizing that we were looking for great opportunities in which to invest, the entrepreneurs tried to sell us on their ideas and how great they were.  They become enamored with their ideas and the technologies.   And it is great to have that much passion.  But passion without the true understanding of the market and making money is misplaced.  Therefore, we, angels, spent time explaining how to make their pitch stronger.

To each entrepreneur, I explained that there are fundamentally four main questions that I need to understand and therefore they have to address each area. 

1. Is there a market?  To whom are you trying to sell and can you pinpoint and find the actual buyers of the product or service?
2. Can you make it?   How is the product made and do you have to use a new process and/or new technology?  Patent protection is great to have, yet that is not sufficient to make a product a business success.
3. Can you make money?  Angels want a return on their investment over a relatively short period of time.  Very few projects result in a 10x or higher return on investment and many angel investments may languish or worse.  The entrepreneur must understand how money is made- the routes to revenue early in the product lifecycle, and at least a preliminary view of how other products or line extensions can be developed.   I was amazed that the entrepreneurs were so focused on their technology and product that many failed to see the advantage of partnering with others in a broader eco-system.  As an angel, I felt it was our obligation to help them see that aspect of business.
4. Can you support it?  What happens after the product is in the market?  If it is a consumer product specifically, how is the entrepreneur going to support it? Is there a call center or will the entrepreneur handle the calls him/herself?  And what happens after the initial product is in the market?  How will it be extended to uncover new opportunities in the market?

I am on the Advisory Board of a couple of startups as I also look for a corporate C-level opportunity.  One startup company in which I am involved has developed a patented technology to make mail boxes “smart.”  As I reviewed the business plan and considered my involvement in the company, I was looking for the answers to the four questions cited above.  Based on what I read and what I could add, I decided to join the advisory board and am very excited about their prospects.

I can see the market and the person to whom I would sell the product.  I understand the patent and see how it can be made today, tomorrow, and extensible to products in the future.  I understand the financials although with such a large market we have to be careful not to let the “law of large numbers” distort the reality of the market.  So we started to review the financials top down and correlated with the market sizing from the bottom up.   And finally, I could see how we can support the product today and in the future.   When I put it all together, I see a high probability of success as an investment and as a successful company long term, notwithstanding any exit. 

I am glad to hear your thoughts.

I trust all had a good Thanksgiving and wish all my readers a healthy and happy holiday season.

David

Random Acts of Kindness Lead to a Great Brand

As many of my friends know, I have a favorite watch. It’s a Tutima FX UTC, a chronograph which displays time in 2 time zones. It’s a beautiful watch and very functional. See www.tutima.com.

my watch

We all know times are difficult for many people and businesses. Yet, I want to point out a random act of kindness from the service center at Tutima that made me an even bigger ambassador for the Tutima brand.

My watch needed to be repaired. It needed a pusher (the little button that starts and stops the second hand for the stop watch). I received a quote and an estimate for an overhaul (cleaning) which it probably needs since I wear the watch basically everyday and it’s been about 4 years since the last “tune-up.” However, like many of us, I am watching my pennies and being, in part, an EIT (Executive in Transition) I was not amenable to spending a lot on the watch at this time. So I wrote back to Christina Pickens, the service manager at Tutima, and explained my circumstances.

I expected to get push back on the repairs and an attempt to make me feel guilty about having an expensive watch and not taking care of it. However, instead I received a nice note which basically said she understood these times are tough and whenever I wanted it overhauled they would be glad to do the job. Not only that, I received a discount on the repair I agreed to and without asking for one! I found the note particularly interesting because I did not expect it and because of her empathy.

How many times during this recession have you seen such random acts of understanding and kindness? Rather, I normally see the service providers trying to take advantage of the unfortunate. In the grand scheme of things, fixing my watch is not a huge issue. But, to me, this experience was quite touching and because of it I am an even more committed advocate of Tutima and a bigger brand ambassador.

When I can, in the future, I guarantee that I will purchase another Tutima watch, probably the Eurofighter Typhoon or the Flieger Chrono F2. And in the meantime, I will wear my current watch with pride and tell my story to all who will listen. It’s a great example of customer service and I commend Christina Pickens and Tutima.

Don’t Give Up: There are People that Appreciate You.

I enjoy listening to Josh Groban and one of the songs he sings is entitled “Don’t Give Up.”   To me, this song is uplifting.   In this economic climate it would seem like a good mantra to chant and, in fact, I sing this song in my head when the pressures of the world mount.  And for many of us, those pressures can come from being in transition, the uncertainty of whether your current job or career will be eliminated or downgraded, or the uncertainty of the new contract or consulting assignment that you were expecting.  Don’t despair.

I was thinking a lot about my friends and colleagues in transition (or soon to be in transition) this weekend and therefore dedicate this blog to them, especially those who are 55 and older.   I have a new hero.   His name is Michael Mancuso and he is the CFO for Computer Science Corporation.  I don’t know Michael at all yet through his efforts and hard work, he was able to help CSC beat the analyst views ….. by 34 cents!!!!  That is nearly a 60% betterment of what the analysts expected.

Several things strike me.  First, he is an excellent leader that was able to get these results by discipline and hard work.  He is humble, giving credit to his team that was in place prior to his joining CSC late last year, right after the economy tanked.   Third, he is 66 years young.  And this combination of things makes Michael my hero.  You can read his Q&A with IBD in Investor’s Business Daily at http://www.investors.com/NewsAndAnalysis/Article.aspx?id=502848.

What kind of lessons can we learn from Michael and CSC and which can be applied to business in general and to executives in transition specifically.    First, no matter how many people say that age discrimination should not exist in today’s market and 60 is the new 40, don’t believe it. Age discrimination exists, right or wrong.   So to ensure you don’t ensnared by this, network with people and take the age factor off the table.  Just remember, Michael Mancuso got his job because he knew the CEO and the CEO knew what Michael could do for CSC.   To make sure you network well, go to functions that are in your domain area as well as others that are tangentially related.   I live in SoCal and spend a lot of time in San Diego.   Some of my friends from TechCoastAngels in San Diego feel I spend more time down there than in Orange County because they have so many great events in San Diego for a techie.   In the next month there will be meetings with the San Diego Venture Group and soon after that will be meetings at the West Institute which focuses on wireless and healthcare.  That supplements some of the meetings in LA and in Orange County such as Tech Biz Connection, Octane and AEA.   The point is, you have to get out and talk with people and make yourself known.  And through this process you can establish trust and build a relationship.

The second thing that is probably not as well known but can be useful in meeting new people but also giving back is under the general category of “mentoring.”  There are formal mentoring programs through the universities that would love to have experienced executives work with the younger and next generation of business leaders.   I, for one, am involved with the UC Irvine Paul Merage Graduate School of Business mentoring program and am enjoying mentoring an IT manager.  Not only is it a great way to help others,  but I feel great by participating because I know that I can contribute and my advice and counsel are well received.   During times of transition, it is nice to have the ability to look at yourself and feel that you are important and believe you have lots to offer.  When you feel good about contributing to helping others, you feel better about yourself and I can guarantee that there will be an extra spring in your step – so to speak.

And if you cannot or don’t want to mentor 1:1, you can always join a charity or volunteer group to help out as part of a committee or on the board.   Volunteer groups are always looking for results oriented people that can make a difference.  Consider groups such as Habitat for Humanity, the Boys and Girls Club or Big Brothers and Big Sisters, or the local zoo, or the animal shelter, or hundreds of other groups that need help.   The sense of pride and accomplishment and knowing you make a difference gives you positive energy and people want to be around those that exude such energy.   And you may find your next opportunity comes from one of these affiliations.

What is the great take away from this?  You have an opportunity to control your own personal destiny.   You can give back and that positive energy will be infectious and people will feel that energy.   There are things that you control and things outside your control.   Giving back through mentoring and volunteering enables you to take control of this part of your life.   Add to volunteering, and active networking plan to build relationships with people for now and the future.  And don’t forget the role models that are out there, like Michael Mancuso and others who through relationships built over time have been given an opportunity to make a difference regardless of age and who succeeded.

A Template for Evaluating a Business Case and a Prescript for Good Marketing

Many of those who follow me through LinkedIn or who have heard me speak, know that I am part of the TechCoastAngels of Orange County. And as a TCA member, we evaluate investing opportunities. Over the past four months I have listened to many presentations and tried to understand whether the investment made sense to me. It always struck me that the focus of most of these meetings is on the financials and metrics such as EBITA. Why? We, as angel investors, are taking a risk and therefore want to make sure the return compensates us for that risk.

The entrepreneurs who present normally have a wealth of information and mostly a solid technical understanding of their products and services. Yet, I have found that the entrepreneur sometimes doesn’t understand how to make a case for the investment. Ergo, this blog is intended to help the entrepreneur or business person by providing a template for analyzing and presenting a good business opportunity. It is far from complete though. This format and template can also be applied by business people in companies who are evaluating a new product, a new service, and even potential partners.

Before the marketing plan i.e. the “go to market” plan, can be implemented, the content of this basic template is necessary to understand what to market. This template and consists of four fundamental questions and a raft of supporting questions. Feel free to add as you see fit:

1. Is there a market? This sounds so simple but it is probably the most difficult item to classify. How many times have you heard: “If I only get 1% of all the Chinese people in X province, I will have a billion dollar business in two years? Were it so simple! The answers have to come from the following supporting questions.

a. Who is the target market? What is the specific need or pain point you are trying to solve? Can you specifically identify your customers so you can market or sell directly to them, e.g. are they small businesspeople in a geography or businesses that need to improve their accounts receivable? The former is easier to identify. The more specific and easier to identify, the better. Interestingly, the more precise the definition, the broader the market!!

b. Is the market stagnant or growing? Will you be looking to increase the size of the market or take share from the competitor and which competitor are you aiming at? (My personal opinion is to go after the expansion of the market and go after the leader in some way, and if not directly, by outflanking that leader.)

c. Consider the juncture of three elements as you consider positioning  the product and service in the market:  customer, competitor and competencies (within the company). Do you want to position your product more towards the customer i.e. a custom product or a series of products? Or do you want to position it against the competition because it is better, faster, larger, smarter or any of the other ways to differentiate? Do you want to position the product relative to special competencies that are inherent in the company today or ones you intend to add to the company over time? In defining the market, the use of this simple paradigm helps determine if in fact there is enough of a market to claim.

 2. Can you make the product or service? This question relates to the ease of which the product can be made, the raw materials to make it, the talent necessary to manufacture, and the intellectual property that can sustain a differential advantage. Specific questions to address include:

a.  What is the Intellectual property and will you be able to patent that IP? Just as importantly, is the IP sustainable? What are the unique advantages of the product or the management teams that can help make the product unique? Maybe it is their creativity and if so, how will you sustain the creativity or keep the team intact? Or is it the interface, ease of use, customer service, support, processes? Do you have the human capital and talent to build the product, specifically the technical skills on board now and in the future? Do you have a ready source for technical experts?

b. How easy is the product to build? Do you need new processes? New equipment? New delivery systems? New materials? Or can you use existing processes and materials? If you use existing processes and materials and IP, will a larger competitor come in and get to market before you will?

c. How fast can you bring the service or product to market? Is first mover advantage critical? Or is getting it right with a quality product more critical. Does anyone remember the first portable computer and who made it? It certainly had first mover advantage but neither it nor the company survived. (The answer: the Osborne computer.)

3. Can you make money? Clearly this is the operative question whether you are an entrepreneur or intrapreneur (an entrepreneur within a corporate setting). Some specific supporting questions include:

a. What is the revenue growth? Sales growth (number of units)? Is this growth realistic? (How many times have you seen business cases that went from zero revenue in year one to $200 million in year 3? How many of those companies have achieved that type of explosive success?)

b. What is the EBITA and how does it compare to other competitors at the same stage of their lives? What is the cash flow and when does the business case turn cash flow positive? To me, cash is king!!

c. What is the cost of goods? How does that cost change relative to the sales unit and revenue growth? What are the ways you are looking to improve the cost e.g. by vertically integrating, sourcing, partnerships, or other means?

d. What is the growth path, or as I like to say, ROUTES TO REVENUIE, over time that will continue to grow the business and make it flourish and minimize the risk of being a one trick pony? Have you mapped out the product and service architecture that enable you to provide more products to the market segments you targeted or find more market segments in which to sell? And while we are talking about selling, have you considered all the selling expenses and the distribution costs?

4. Can you support it? This is particularly true in a service business but equally true in a software business or a complex product. Some additional questions include:

a. Will there be online service and support? Will stores in which the product is sold support the product or will there be an 800 lines or self service on the web? How easy is it to service the product, service or software via a knowledge ware system on the web? How many of you have actually tried to solve a problem with Microsoft software by using their tech support and knowledge base?

b. Do you have an adequate training program for those on the front line, in customer service, or account support? Is the product so complex you need to have technical sales experts and if so do you have the wherewithal to hire, train, and pay them?

Let’s not assume that these are all the questions to address. Yet, this is a reasonable start in getting a good handle on whether the business will make sense. And more interestingly, by answering these questions, the marketing team will have a better understanding of “how to go to market.” And by so doing, they will have the opportunity to be successful.

Marketing ski high wi-fi

I thought I would take the opportunity to post Mary Kirby’s blog on an interview Mary did with me prior to my leaving ATX Group. I have fond memories of working with my colleagues to implement Internet and entertainment services on international flights and that was certainly one of the highlights of my career. Unfortunately, that service offering was not a commercial success.  Yet I learned a lot about working with new cultures and many of the marketing innovations my team developed now live on in other companies pursuing commercialization of Internet on board airlines using either satellite or cellular frequencies.  While Mary calls me “king marketer” I feel that this was a team effort, not only the marketing team but the entire organization.  

David
—-
Connexion by Boeing’s former king marketer uncensored

By Mary Kirby, May 27, 2009. In RunWayGirl.

David Friedman used to be the king marketer at Boeing’s now-defunct satellite-based connectivity service Connexion. As VP, marketing and direct sales Friedman was responsible for product management, service evolution, pricing, distribution, sales, and promotional activities. Through his efforts, nearly 500,000 customers had the opportunity to use Connexion’s service in the first two years of operation and satisfaction levels were greater than 90%.
A few months ago I had the very good fortune to speak with Friedman, who is now the executive vice-president and chief marketing officer for ATX Group, which provides telematics and information services to automobile manufacturers. It was an enlightening conversation to say the least.
First off, Friedman made clear that he no longer represents Boeing so his comments here are completely his own. But while Friedman has been out of the aviation industry for two years, he stays in touch with what is going on. His comments are particularly apropos in light of yesterday’s conversation about whether passengers will pay outright for in-flight connectivity when the same high-speed services are free or virtually free on the ground. Here is Part 1 of a two-part blog based on our conversation.
One of the big challenges associated with offering Ku-band-based connectivity – the likes of which was offered by Boeing – versus the air-to-ground (ATG)-based offering provided by Aircell is cost. “The equipment Aircell is putting on board is about $100,000, whereas Connexion was reported as $600,000 on up by the press at the time. I cannot give you the actual [Connexion cost] number. But half a million is a very safe number. Connexion was larger. It weighed a lot more. And the equipment used on the plane is different.”
With such a hefty price-tag for Connexion, airlines were reluctant to pay for installations.

“We [initially] offered to give it away as a trial for free but the airlines said, ‘If this is successful, you want us to pay for all these antennas?’ They were concerned that if customers were demanding it, it would put them [the airline] in a tenuous situation in terms of customer relations.
“So you have the cost of the system and cost of the infrastructure. You can offset that through a variety of ways, such as advertising. But sponsorship and advertising and direct fees is not enough! People believe, by the way, that they should have Internet for free because they are used to having Wi-Fi for free. Then couple that with the issue of power outlets. If an airline doesn’t have enough power outlets on the plane, how are they going to charge a flat fee?”
“What we did in Connexion was we set up our pricing for two hour blocks. We were able to set up a system in the plane and on the ground that said if you only have a battery that lasts two hours and you don’t have power, then the best thing to do is to buy it in the one hour or two hour or 30min grouping so we had little cards. We specifically set up that pricing so we can adapt to what the customers wanted.”
Friedman says Connexion had upwards of 500,000 users after two years. “It wasn’t insignificant and our loyalty rates were extraordinarily high – I think around 90-plus percent. If you used it once, you wanted to use it again. The problem was we only had 200 planes equipped and to cover that cost, you needed a dramatic increase in the number of planes. They did have to pay for the installation. Lufthansa made a commitment. But if you look at the keys to success, you had to get American and United and we just couldn’t get those planes to commit (after 9/11 and the SARS scare). So you had a fundamental issue relative to timing. Timing is half the battle in any kind of business.”

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Categories:Air Transport,In-flight Entertainment/Communications,Original Equipment Manufacturers,US Air Transport

Marketers need to prepare themselves for change- embrace it!

I read about a survey from Pat LaPointe that indicated that 27% of marketers suck!!! Yep.  That is what was said when the question was posed: “how many of you believe marketers suck?”   When you read deeper, the survey was really anecdotal and asked of a few people.  Notwithstanding this pseudo-study, I was at a MENG meeting the other day and we asked similar questions.  What do the marketers have to do to prepare themselves for change today?  What training is needed to prepare them? What do the marketers need to do to make sure that the CEO values them?  And to me that is the overarching problem. 

As an engineer converted to marketing executive, I can appreciate the problem as I have faced it before.  In my previous posts, I tried to indicate what is wrong with marketing and a few prescriptions to change the attitude.  But even these prescriptions are no magic pills and will have to be accomplished over time and these prescriptions will be different for different companies and different CEOs.

I will address these three questions over a series of three consecutive blogs to make it easier to digest and not sound like a tutorial.  The first question:  What do the marketers have to do to prepare themselves for change?

There are two aspects the marketer must address.  One is to understand how customers are changing.    The other is to understand the new tools and techniques that are available that must be considered and integrated into the overall marketing plan.

The marketer has to be the linking pin from the outside world looking in and from the company view looking out.   The marketer must be facile in the “traditional” marketing and the new digital marketing world and apply them correctly.   To be prepared to understand the environment and the changes that take place – after all the tools have to be applied in context- the marketer must visit and be visible to the unique customer groups they deal with.  How do you do that with the reduction in marketing budgets?

Mystery shopping, customer advisory boards, distributor boards, customer satisfaction surveys are a few tools that can be used.  In this day of shrinking budgets, large scale market research studies which cost hundreds of thousands of dollars must be foregone and the marketing person has to be creative in determine how to get information on the behaviors and needs of his/her customer group.   When I was with US Cellular as its head marketing officer, I personally visited stores and distribution and acted as a shopper to understand the experience any buyer would have.   I talked with sales people and talked with customers.   It did not take long to get a feel for what we did right, what affected the brand, and what we needed to do to improve.  More so, I really ENJOYED being in the field and talking with customers.  Imagine this NY guy in Iowa talking to farmers wearing Cartharts and driving tractors!!! Maybe they liked my NY accent or maybe they just liked the fact that I was interested in hearing what they said, because I always was invited to ride in their combines and tractors and always invited back.  Those were fond experiences.

Additionally, most customers think linearly, i.e. when asked what they want, the customer normally answers with adjectives such as better, cheaper, faster.    Therefore, the marketer must reach out to “lead users” as Eric Von Hippel from MIT would call them.  These customers invented solutions to their problems.  Getting in front of them and talking with them and watching what they do were critical to understand them- and learn what we need to do to be innovative.   Just consider one panel of lead users and one panel of traditional users and you can get lots of interesting data.  And if they don’t want to talk in front of others, call them and engage them one on one.

Marketing can be very tactical i.e. implement and advertising campaign or direct mail campaign, or strategic, i.e. how to maintain competitive advantage, how to use new innovations and which ones in the marketing programs.   Part of the strategic thinking a marketing executive has to bring to the company revolves around using new tools and techniques.  Does the company want to be on the leading edge of internet marketing for example or be a fast follower?  Should the company twitter or develop a group on facebook or LinkedIn?    Yet even before those decisions are made, the marketer needs to take a view of how he/she will go to market in the future.   To gain perspective on that, I suggest the marketer consider the following ways to glean that knowledge:

• Read Faith Popcorn’s books and articles concerning the future
• Sit down with you sons and daughters and watch some of their shows as they will adopt new technology and display behaviors prior to the general population.   (I have to confess, I used my 9 year old daughter and her friends to critique a new line of cellular accessories we were considering rolling out in our stores…. and I let them keep the accessories as a gift.  )
• Scour the internet for new ideas, innovations, and technologies.  Have discussions among internal groups and involve engineers to discuss how some of these new technologies can be applied to business (and the engineers will bond with the marketing folks as a by-product).
• Read Investor Business Daily, The Wall Street Journal, and other papers and see what is hot in new technology.
• Attend local tech seminars and conferences and learn about new ideas.
• Attend the myriads of free webinars usually put on by early stage firms wanting to get a toe hold and their new technology in the market.  I do this all the time to learn about new techniques in internet marketing, SEO, and the use of tools such as twitter.
• Look offshore in China, Singapore, Japan, and Europe to determine how leading companies there are using new marketing methods.   Determine the leading companies and study their marketing practices.
• Subscribe to a best practice program such as the Marketing Leadership Council or Marketing Leadership Roundtable.
• Join an angel investor group – like the one I joined: TechCoastAngels of Orange County- or affiliate with one so you can learn about new ideas.  It’s not only the ideas or deals that are brought to the table but the discussions with the entrepreneurs around the table that are valuable.

I would be interested in feedback and other ideas which I will aggregate and post in a future blog.

CMO= Chief Metrics Officer

I was an invited speaker at a Dallas AMA panel discussion about how a CMO can be an ally to the CFO.  There were 6 of us on the panel and the first thing we did was to introduce ourselves.   The first panelist said he started his career in advertising and developed some commercials for a well known ad agency and many people in the audience remembered and resonated with those commercials.  The second person said he had an ad agency background also and developed some unique trade shows.  The third person said he was a CPG maven and was able to improve the brand of several products for a well known telecom company.  Then it was my turn.  

I said I was a strategic marketing executive, an engineer by my roots and my big concern was bottom line profitability and while the fluff and stuff that my colleagues talked about was great to see, it was a minor part of being a CMO and valued partner to the CFO.    The audience became somewhat silent and then laughed- somewhat uneasily.  During the rest of the panel discussion, my co-panelists defended their position.   And I became known as the anti fluff and stuffer.

My purpose is not to dengrate the skills that they bring to the table.  They are clearly important and can drive demand and provide sales support.  And, let’s not forget, that a good commercial or a trade show energizes all the people who work for the company.    What I wanted to point 0ut- and I will cover aspects of this in other blogs- is that to be a great CMO and an ally of the CFO, requires the CMO to be the Chief Metrics Officer- at least from the perspective of measuring things related to revenue growth and the costs related to generating those revenues.  One of the main principles of StreetSavvyMarketing is that the CMO MUST develop and meticulously manage the metrics that drive profitable growth.

Let’s take a look at a simple equation:    P=R-C.   The role of the CMO is to drive all things related to making the “R” increase and managing the “C” such thatthe return on investment for those expenditures is greater than the internal rate of return of the company.    As a CMO you have to ask:  What are the routes to revenue that I control?  What are the costs that are under my control to develop programs and tactics and how can those programs and tactics drive revenue growth?  In future blogs, I will take a look at ways the CMO can affect “R” and what can be done to affect the effectiveness of managing “C.”   

For now,  let’s just focus on metrics.  Here’s my list of goals and metrics, some of which may be useful in a service business, some in a retail business, some in a manufacturing business, some for B2B and some for B2C.   As you can tell,  this list is far from and has to be specific to each company.    However, maybe by collective wisdom we can develop a more comprehensive list.  If you have others, please suggest them and I will compile them. 

Some of these metrics have a primary effect on revenue, i.e. a tactic or program results in a specific sale.  Others have a secondary effect i.e. an ad drives people into the store and then the sales staff has to convert the prospect to a sale.  As you go through the following list, think of which are primary (directly measurable) and which are secondary.

Average revenue per customer

Occupancy rate

Average revenue per room night

Revenue growth per year (total, per segment, per customer)

Revenue per square foot (in retail)

Margin per product (in setting price and supporting sales)

Revenue per channel member (in support of expanded distribuiton)

Number of channel members (breadth of channel members)

Percent of revenue by channel

Percent of revenue by product line

Visits to the e-commerce portion of the website

Time visitors stay on a page or site

Leads generated

Cost per lead generated (at trade show for example)

Response rate

Aided and unaided awareness

Percent of revenue from new products

Percent of new to the world revenue vs. total revenue (if you have an innovative culture)

Customer satisfaction

Customer retention/churn

Customer willingness to recommend ( Fred Reichheld’s “ultimate question”)

Customer willingness to repeat use

Secure customer index

 

I know there are probably many more metrics that may be specific to different businesses.  Finance companies are very different than manufacturing companies.  Telecom companies are different than Internet companies.   B2B companies are different than B2C companies.  The CMO must know which metrics are important to his/her business and then ensure that his company, his CEO and CFO agree that these are important measures to be tracked.  Then, these metrics must be carried down to each person on the marketing team and their goals and objectives must reflect these metrics.  By doing this the CMO becomes Chief Metrics Officer and will become a better partner to the CEO and CFO.

David

The Customer is Usually Right and Always has Something Important to Say.

I recall the day early in my career when I worked in Penn Station in NYC fixing public pay phones. (Cellphones were not invented at until the mid-80s!).  A very large man – about 6’ 6” 250 lbs- called me over to where he was using the phone and told me the phone was broken.  It didn’t seem broken and I told him so.  Thereupon, he ripped the phone off the wall and broke the handset into two pieces. NOW THE PHONE WAS REALLY BROKEN!! 

As a young engineer this left me with an indelible impression.  My company, the Bell System, trained me to believe that our products were great.  My boss even told me that there is no reason to improve our products.  But when I saw what the customer did and then talked with him, I realized that our opinion mattered some, but the customers’ opinions mattered more.  And that experience was the start of my conversion from engineering to the “dark side” of marketing.

I learned over the years that a good marketing executive talks with the customers regularly.  Clearly, the way we talk with the customers is different in this digital age and different in some cultures.  In Japan, for example, engineers sometimes take their products to the homes of their customers to see how the product is installed and used.   Think about this concept in today’s market with software and computer products.  Wouldn’t it be great to understand how the customer manages the human machine interface and problems that might exist?   Sure, research has most likely been conducted in the past, perhaps in a controlled environment, and the interface and usability already debated, analyzed and engineered.  Yet, in a real live setting you may get different reactions.  For all of your older folks – or historians of automobiles- I just ask:  Do you remember the Edsel?  It’s not a perfect analogy, but you get the point.  

In several hotel chains, the executives regularly take on front line jobs to get the reactions of the customers – and get to solve  real everyday problems.   Not only do these executives hear directly from customers, but also they understand the problems the front line people face and circumstances they endure.  As you “go to market,” these interactions affect customer satisfaction, your brand, and profitability.   The prescription: find ways to reguarly meet and listen to customers in their own setting.

As a Vice President for US Cellular, I regularly listened to customer service center calls and participated actively in “mystery shopping.”  All this helped me, as a marketing executive, improve the brand experience.  Did the front line support the brand as we showed in our TV ads and heard on radio?  Were the representations correct?    After mystery shopping, I took the time to meet the front line and their managers to share what I learned and correct problems.  We also took to time to share these leanings with others in the company because marketing must be the voice of the customer. 

Today the world is very different with social networks, blogs, and Twitter providing customer reactions in real time.  And the marketer must be able to listen and synthesize this information coming from different sources at lightning speed.   This type of customer listening will not replace other market research or customer satisfaction studies.  Those are needed as well.  Just remember, different customer groups respond to products differently.   The younger generation might just tweet their satisfaction (creating a nice positive viral buzz) or dissatisfaction which has other dire consequences.   Others may post their ratings on YELP or Amazon’s product reviews- a little slower perhaps but just as permanent.

The lesson learned is that we must synchronize to our customers’ time cycle, not our own.  We need to keep our antenna up and listen to all channels for the keys to product performance, customer satisfaction, new products, and ultimately to profitability.   And we must use the right listening posts- conventional and digital- to understand and react as appropriate to customers’ opinions.   While the voice of the customer is sometimes the voice of reason, it is always a voice to which must listen.

Thanks for reading.

david

I Hate Marketing–NOT!!!

When I left my last company, several people told me to teach and coach others. So as I thought about what opportunities to pursue I decided to blog!!!! Now, as you know blogging is not for everybody but since I have a lot of ideas- and experience to match- I thought I would be able to share my perspective on a variety of subjects relating to business. Accordingly, I titled my blog “business of business” with the URL www.streetsavvymarketing.wordpress.com. I figured that as a kid raised in Brooklyn, NY I learned a lot about making money and survival…. and in reality companies who make money (let’s say profitable revenue) will survive and flourish. But they have to do this consistently over time.

As I thought about this first post, I recall my experiences in marketing and how many executives relate to the M word. Over time, I expect to provide my perspective on marketing and what I really believe it to be in this new digital and customer centric world. For me, I started as an engineer and converted to the dark side of marketing early in my career as I moved up the product management and product development chain. I consider myself a line person, one that is there to innovate and generate revenue, not to be confused with a cost center. And for many of you who know me, I make no pretense that I am not a “fluff and stuffer!” I know I ruffle many of my colleagues’ feathers when I say that. I truly believe that marketing has a bad rap because many executives think that marketing is merely sales support or marcom. Granted these are important components and tools but certainly take away from what I know is the real concept of marketing i.e. how do you go to market with your products and services.

So in many ways I hate marketing because of the way it has been perceived in the past. And that makes a marketing executive, a Chief Marketing Officer like me, cringe when I hear the term marketing and especially when I hear others not respect the function.

In reality, I love the marketing concept and the idea of going to market and outsmarting my competition, and growing revenue, and being credited with bringing new innovations to market, etc. It is a great profession because as a complete marketer it uses so many skills and you are constantly learning and applying.

Over time, I will cover various learnings from my past in being the complete marketer and one who is respected in the company. And it has nothing to do with self-aggrandizement. It has to do with survival and growth of a company. To me, an excellent marketer can help a company in so many ways. A mediocre one, though, denigrates the concept of marketing. A poor marketer destroys the term entirely.

So, welcome to my world of marketing, i.e. the business of business and how to be successful and grow. I hope you find this blog enlightening and enjoyable. More importantly, I trust you will find some of these blogs thought provoking and useful whether you are a novice marketing intern or a seasoned pro. And let me know what you want to discuss and learn about.

One other thing. When I grew up on the streets of New York I learned to open my ears to what people said and kept my antenna up so I would not be taken advantage of. In Street Savvy Marketing, you need your antenna up: to hear what customers say, to understand what customers really want, to find the right new tools to help your customers succeed, and to implement new tools and ideas to help your company succeed.
All the best.

david