March 10, 2008

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Pretty Good Personalization The CMO Council got Xerox, Pitney Bowes and a bunch of IT vendors to pony up cash to produce a report that documents the obvious -- personalization is good enough for those who need it and nobody has made the business case for more widespread adoption. The reality is that businesses concerned with churn, serial or continuity sales and consumer fraud have bought and use CRM and IT tools sufficient to separate good customers from bad ones and to prevent losses. The vast majority of companies, even those who accept the premise -- that using personal data to craft offers and messages will yield faster, bigger orders over time -- have not been convinced that the cash costs and the disruptive costs of buying and installing complex CRM tools will pay off or pay out. In fact, even many advocates of greater personalization believe that the benefits of personalization in some business sectors plateau before the technology gets paid back. When we discuss personalization we are way beyond addressing individuals by name (e.g "Dear Danny"), although that's the most common use of personalization technology. We are talking about using purchase histories, preferences, web behavior and inferred data to make pointed, customized or time sensitive offers and to allow individual behavior to trigger outbound messaging and offers designed to increase volume and/.or maintain brand or product loyalty. And while 53% of those surveyed in the report entitled "The Impact + Influence of Individualized Content Delivery" think personalization beats traditional mass market delivery, there has only been anecdotal evidence that this works and customers love it. There has not been enough data or enough companies willing to come forward with case studies of sustained personalization tests and results to reach a critical persuasive mass. Add to that, the suspicion that even when it works, it peters out after a few shots rather than drives a compounding effect on volume, profits or loyalty. So its no real surprise that less than 10 percent of marketing budgets go to personalization or that marketers "appear fearful and intimidated by the investments required for personalized communications." The key gating factors to widespread adoption are: 1. Management Sensibilities. Most don't get it. Those who do; don't think its worth it. And even those who think it might be worth it won't give it priority among all the other competing IT investments an enterprise might consider. 2. Cost. It costs a lot to buy and implement. It costs a lot of time, money and patience to install, train and use. It is never an easy transition and few CEOs or CFOs are willing to bear the disruption, hassle and employee pain. 3. Can't Compete for IT Priority. 47 percent of those surveyed say they can't gather or properly integrate the data needed to pull personalization off. Add to that that CRM is always last place on the CI Os hit list since he/she rarely owns it, rarely understands it and rarely is willing to take direction from the monkeys in marketing. As an IT function it doesn't excite the geeks and as business function, its ROI is unclear. 4. Not Data Ready. Most companies don't know much about their customers or can't aggregate data gathered in different business silos. The systems don't talk to each other and neither do the people running them. Layer on top of this the usual bureaucratic politics where different departments own different tools (web, direct marketing, customer service) or different customer segments (industry verticals, regions, national or global accounts) and you get a United Nations-like quagmire. The real question is -- How do I get a bunch of high powered firms to pay me to author and shill for something that everybody already knows?.
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American Airlines: Another Customer Service Disaster In customer service ... silence is never golden! Unfortunately this is a lesson the airlines have yet to learn in spite of frequent hiccups that negatively impact on their brands. American Airlines canceled my flight (AA 45) from Paris to New York Thursday after several hours of silence and lies and delays in the lounge and two more hours of lies and delays on the gate, the tarmac and back again. The good news is that the pilot wouldn't fly a plane with a kluge-y computer system. The bad news was that the airline was totally disingenuous and completely unprepared for what ought to be a regular occurrence. The true values of a brand and their approach to customers comes out in non-routine situations. You might have imagined that after last year's big disasters with customers trapped on snowed in flights, nasty videos on YouTube and class action suits that American and others would have created a standard drill and a standard way to communicate with passengers when things go south. From the moment the pilot called it quits, the situation deteriorated. We were told that Passenger Services would help and instructed to get off the plane and claim our bags. We were told there were no other flights available and that, based on class of service, we'd be put up at different hotels and flown home the next day.We weren't told any details No what, when,how or where. We tromped off the plane, through passport control and into a baggage retrieval hall where a phalanx of American representatives and armed French soldiers knew nothing and said nothing. One woman, frustrated by the number and variety of questions from anxious travelers, admitted she wasn't even trained on the reservations computer system. We waited almost a hour with no official communication. It took almost 90 minutes for the bags to be delivered. At one point airline reps handled out a sheet inaccurately documenting,what had happened. Nobody knew what to do with these sheets, but there was a stampede to get them. I guess nobody at American ever took psychology 101. Nor do they understand that uncertainty is the greatest anxiety producer in humans which prompts all kinds of unusual behavior. It seemed to me that getting several hundred unanticipated bodies out of the system and off the premises was the airline's top priority rather than dealing fairly and compassionately with its paying customers. Perhaps they figured if they could clear the wreak they could sort it all out later. Unfortunately not a single customer shared this perspective. If anyone asks, I propose that customer facing brands who experience service delivery hiccups adopt a posture that emphasizes compassion and communication. If if were up to me I'd 1. Draft messages in common parlance that speaks directly to the obvious needs and anxieties of customers. It wouldn't hurt to apologize and empathize with passengers.It also wouldn't hurt to offer several alternatives raher than a single take-it or leave-it offer. 2. Have a disaster plan handy and leverage all available personnel to manage a crisis. Cue these people in advance. Give them several things they can actually do and say rather than present them as unprogrammed robots capable only of deflecting inquiries and further frustrating customers. 3. Dedicate reaction teams to handle re-routing, re-booking and individual cases. Nobody wants to be stuck. Everybody wanted to be somewhere else, that's why they chose American. The brand has an obligation to try to make good on that premise even when the equipment doesn't cooperate. I'm not operations wizard, but when things initially got funky (long before initial check-in and boarding) why didn't somebody fly a new plane into CDG in anticipation of a problem? 4. Tell more rather than less. The natural bureaucratic instinct is to CYA and sidestep blame. This ignores the fact that customers chose your brand in the first place and have a fair amount of elastic tolerance for performance issues if you are straight with them. In fact when you ignore, bullshit or lie to them this tolerance creates an inverse effect --- your brand advocates turn their energy into enmity against you and become anti-brand advocates. Nobody thinks the airline business is easy. Everyone understands mechanical failure. Tell us what is really going on and tell us what you are doing to help us and to fix things and we'll go along with you, even without food or free drinks. Ignore us, herd us through an airport and leave us to...

Danny Flamberg

I am a veteran marketing consultant working with leading and emerging brands

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