Traditionally (as in most everybody I know in this world) we use financial metrics for customer segmentation, right? Either lifetime-spend, latest-spend, last-year-spend, or profitability, or what-not. [...]]]> I have been thinking about this for some time (BTW, this is a short post – hope to ignite some discussion with this), would love to get your thoughts.

Traditionally (as in most everybody I know in this world) we use financial metrics for customer segmentation, right? Either lifetime-spend, latest-spend, last-year-spend, or profitability, or what-not.  We may use other aspects of segmentation for marketing (like demographics, products purchased, support requested, etc.) depending on what someone in someplace decided it would help us find the “right” people to buy our product (usually that someone was a marketer, or a focus group, or an MR firm we hired – or something altogether).

This has — well, worked for us until now since we have been focused on the shotgun approach to marketing and sales for the most (yes, I know that means anybody but you who have done a masterful job of hand-selecting your clients, unlike your competition).  That is, we loaded the shotgun with pellets, shot in a general direction (segment) and some hit and some missed, if we did a decent job of segmenting we shot into a bush with tons of birds and we hit more than we miss.

This is not the bestest model in the world, but it works.  Sells product, mostly targeted at the right people.

As I was doing research for a deck I did on long tail CRM, I found a case study that was too good to pass up.  I have been using it for the past few weeks in presentations and talks, but wanted to get your thoughts.  This is from a company that chose to remain nameless, but can tell you that they are in telecommunications.  I can assure you, their work applies to either B2B or B2C or whatever letters and numbers you want to put together. OK, stage is set.

They used email marketing.  As we all know, email is “virtually free” to send; but that is irrelevant.  See the table below, first column is past, second column is the new model they use for segmentation (more on that after the fold).

Now, anyway you want to look at that — it is good.

Either because they sent fewer emails, got more of them opened, more clicks,, generated a similar number of leads as percentage of people reached — and 6x more closes.  These are good numbers, no matter how you look at them.  As I said, they are based on a real case study from a company I talked to at length and you can see that they knew what they were doing, the number of emails opened was outstanding before the long tail segments were created.

Of course, now you want to know how they did that, what is the long tail they aimed for.  That is the purpose of this post anyway…

Use Case Segmentation.

Instead of focusing on profitability, past purchases, ownership, time, dollars, or similar this company used analytics to find a very specific use case (sorry, cannot reveal details here) among their customers and found a service that applied to those people.  By using the data available to them, they were able to fine-tooth-comb their customer base and found these few people who were more receptive to the message (which was also carefully crafted to reflect the use case) and make more money, for a lower cost (we won’t debate that now, but let’s assume a lot of sunk costs and just a per-email cost was used to calculate it).

What do you think?  Would love to hear your comments…

I’d like to revise that to say that behind every successful enterprise software company there is (at least) one nagging analyst egging them to do things right.  I’d like to think that I am that analyst for Lithium.

I must’ve heard this question every day in the past 6-9 months.

The intent was not how to do twitter, how to leverage Facebook, or should we use Klout scores for customer service – it was very specifically about how customer service departments [...]]]> How can organization embrace social channels and technologies to improve customer service?

I must’ve heard this question every day in the past 6-9 months.

The intent was not how to do twitter, how to leverage Facebook, or should we use Klout scores for customer service – it was very specifically about how customer service departments can embrace it.  It was getting so ridiculous that together with my friends at Ciboodle we conducted a research report to answer those questions. We got nearly 400 responses (some of them very interesting) and you can get the report here if you want to read it.

I am not going to give you a full summary here, we do have a great executive summary if you are not interested in reading the data or the whole report, but I wanted to cover two issues that came out of this study:

• How today’s processes are faring in an increasingly social world
• What is the value to the organization of embracing social channels and tools

We asked the question of how processes used to support social channels compared to those processes used to support traditional channels.  Overall, the answer was (almost) as expected: 2/3 of organizations have not created processes yet as part of their social adoption, they are more or less living day-by-day and trying to figure out how it will play out in the long run.  At this early stage of the social journey that is not very surprising.  We then cross-tabulated those answers against the length of time they had been supporting social channels – and this is where we got some interesting data.

The table below shows the results of that cross-tabulation.  (note: we did not have sufficiently large numbers to make the conclusions final but it does indicate where the mindshare of the market is in relation to this question):

When using social channels, processes are less defined – almost by a ratio of 2:1.  Among those that claimed their processes were less defined, the majority were those that had been doing Social for between six and twenty-four months.  The ones that would be a more logical choice (those just starting out, below six months of experience) to have less defined processes are not – showing how newcomers to this set of channels and tools understand how it is no different than any other channel implemented before: it has to have a strategy, integrate well into existing processes, and don’t change the way experiences occur – rather augment them via a new set of channels.  Clearly delivering similar experiences via new channels is in the mind of those that are just starting as well as those that have been doing it for a while.

The second issue we spotted was the value to the organization of embracing social channels.  We asked respondents to identify what were the benefits they were seeking from embracing social.  We asked them about the two most often cited reasons to adopt any channel: to meet customers’ expectations or to save money.  The difference between these two reasons is a slant towards a customer-centric, efficiency view of the world (saving money) versus a customer-centric, effective view of the world.  The table below shows the results:

It is very clear from these results that focusing on meeting customer expectations, and exceeding them, is the main driver for social channel adoption having been quoted not just as the top reason overall, but also as s secondary reason for organizations to adopt social.  The reason organizations deploy these channels is not driven by outbound company-centric needs but to give customers what they want, need, and ask.

The rest of the report is actually even more interesting and proved many other things – but to know what, you will need to download it and read it.

And give us your comments.

Many thanks.

The experience last year for all participants, in their words, was incredible.

They learned amazing new things about their companies and products.  The discovered new ways to present their products to the market than they had ever before.  They found new ways [...]]]> Starting today at 7 AM US-EDT CRM Idol 2012 (the second season) begins.

The experience last year for all participants, in their words, was incredible.

They learned amazing new things about their companies and products.  The discovered new ways to present their products to the market than they had ever before.  They found new ways to talk about their companies, the people in them, and their passions.  They encountered mentors and advisers that pointed them in directions they never expected to go before – and they found countless success along the way.

Five of the companies that participated have, since then, been acquired and go on to become larger, more focused and better empowered organizations.  Virtually everyone we talk to from the first season said the competition helped them understand how to take their product to the next level.

Now it’s your turn.

Starting today at 7 AM US-EDT you can apply to be a contestant in CRM Idol 2012.  All the information you need, and the application form, can be found at the CRM Idol 2012 web site.

If you are  software vendor in the Americas, EMEA, or Asia Pacific regions – you want to apply.

Go to the website, apply to be a contestant.  Trust me, you won’t regret it.

On the surface, this [...]]]> Today KANA announced it had acquired Trinicom a Nederlands cloud-based customer service provider.  According to the company, this move was to complete their offer for all company sizes and delivery models – from small to large enterprise, and from on-premise to cloud-based.  Terms of the transaction were not disclosed.

On the surface, this may seem like a move by KANA to match Salesforce’s acquisition of Assistly (now Desk.com).  However, there is more to it that what seems.

I had had discussions with  KANA prior to this  acquisition and my answer  when they asked whether it was a good idea was that there were two ways to justify it: either they acquired  terrific technology in the process that could be used to complement or replace what they were already using in their Enterprise offer, or to offer a solution in a market (SMB) where they could not enter with their products today (for many different reasons, but mostly because it is a very different market and it requires not just a scaled-down version of an Enterprise product, as most vendors erroneously presume, but also a different business model to do it successfully).

I also said that the cloud-delivery was critical for the SMB market, but it did not add anything to Enterprise solution right now.

With that in mind, I can see where Trinicom delivers.

With 200 SMB customers the company is small, well placed vendor in the EMEA market (they do have some customers in the US, but nothing  significant).  The product seems to be well built, delivering value according to statements from theirr customers, and  management seems to understand SMB market quite well.  This could be a good way for KANA  to show a more complete spectrum of products and offerss in the market and complete their lineup.

I am also looking for this deal to bring  expertise in cloud to the company and hopefully see it trickle into other areas of delivery, helping them move away from on–demand and into true-cloud territory.  Baby steps.

I am not looking for significant  revenue from this acquisition, a SMB vendor with 200 customers does not bring in a lot of cash by comparison to a large-enterprise vendors with 200 customers — or even 600 customers.  The addition to the bottom line of this deal is likely to be just an add-on for the first year (cannot know for sure as terms of the acquisition were not disclosed and Trinicom never revealed their revenues).  However, if KANA can train their sales force successfully and use it to extend Trinicom into the Americas and APAC markets, there may be more revenue coming in the next 12-24 months that would add to the bottom line.

I can see long-term value from this acquisition coming to KANA, but I have a wait-and-see position at this point until i see movement in the areas highlighted above.

April edition of CRM Magazine came out and with it my long-awaited (by me anyways) article on “The Big Three” where I lay out [...]]]> Well, Steve Martin said it far better (sorry, cannot embed it for some legal reason)… but the concept is the same.

April edition of CRM Magazine came out and with it my long-awaited (by me anyways) article on “The Big Three” where I lay out the three big three problems in front of us for the next decade.  Would love your comments, would love your rants, would love for you to read it and tell me what you think (down below, in the magazine web site, on twitter — your choice!).

I am honored to be published, and like Steve said in the movie ”things are going to start happening to me now”.

Moxie was one of the remaining independent eService vendors (together with eGain, FuzeDigital, FuzeDigital, KANA, Parature, RightNow, and [...]]]> Earlier today I released an analysis note for my customers based on the recent announcement from Moxie Software that it has consolidated their internal collaboration and customer service solutions into one.  The following were the key points:

Moxie was one of the remaining independent eService vendors (together with eGain, FuzeDigital, FuzeDigital, KANA, Parature, RightNow, and Sword Ciboodle) that needed a distinguishing feature to find their niche market; all vendors in the market are reaching the point of specialization where they establish their niche and live happily ever after in it – it is part of the maturation in the market.

There are three proof points to show this is the right move for them (but I have one concern).

The birth of the collaborative enterprise: ever since we began to talk about the concept of converging social CRM and enterprise 2.0 into what we early on we called social business we maintained that the idea was to reach a level of “hybrid” collaboration between organizations and customers aimed at reaching higher levels of value for both.

Customer Service is the right place to start: I have long maintained that for vendors that have complex customer interactions (what we tend to call business-to-consumer interactions) customer service is the place to be.  This is where most of the transactions take place.  In my many years of doing research in CRM I have found out that between 50% and 90% of interactions for these vendors happen through (or at least get started) Customer Service departments.

Communities are more than just social channels:  The value of a Facebook like or Twitter follower can be discussed (and “calculated”) forever, but it pales in comparison to the value that feedback, knowledge-sharing, and collaboration bring to an organization.  To leverage this power properly an organization must have the ideal infrastructure to support communities to engender data, knowledge, and feedback.

Full disclosure, I have worked with Moxie for the past years advising them on the product direction and strategy as well as market positioning – this is to say that I agree with the proof points since it is what we worked on for that time. However, I do retain one concern about this move: market perception.

Moxie has been perceived as a dual-solution provider: Partly due to the market confusion as to what they delivered but also because it was easy for their competitors to cast them as something they were not (i.e. if they were in a collaboration deal their competitors could cast them as a customer service vendor and vice versa).

I see this as a good move for them, I am watching the progress as the market evolves.

What do you think? Is this another evolution point for Social Business? Is this a good move? Would love to hear your thoughts…

Organizations want to do something with it and they think it can change the world; if you go by their word every organization in the planet is doing something with it.

I am talking, of course, about Social’s latest craze tool: Gamification.

Although it has been around for quite some time, behavior [...]]]> Everyone wants in.

Organizations want to do something with it and they think it can change the world; if you go by their word every organization in the planet is doing something with it.

I am talking, of course, about Social’s latest craze tool: Gamification.

Although it has been around for quite some time, behavior modification– the theories behind it – have been around for some 50-60 years in current format, we are still in the early infancy of using it for business.  And, as it always happens in the early infancy – the value propositions behind the implementation are being missed.

Not purposefully, mind you – but yet still being missed.

The gaming dynamics or mechanics of gamification (the game part, playing to retain interest of participants) is not what brings value.  We can definitely see an increase in repeat visits, maybe even tie that to an increase in sales or reduction in costs if we do a decent job correlating KPIs and gaming metrics; but that is not the end game.

Bringing people back to your site is not what Gamification is all about; nor is it about playing.  It has to deliver long-term business value to remain past the initial stage.  Business value that we have to define well enough to measure it – or even recognize it and track it.  That is what we need to figure out in the next few months.

Thanks to my friends at Badgeville (one of the Gamification vendors) I am going to spend the rest of the year investigating and researching that business value that provides long-term justification to the idea of “playing games”.

This is the first of a series of posts and webinars I am going to be doing with them this year.  I want to use the series to introduce ideas, research, and what you need to know to leverage Gamification in business.

It is not about Using (or Playing)

The most common misconception about using Gamification is that it is about enticing and incenting the usage of features or functions.  While at face value this may be true, there is limited value in bringing customers back merely to use the specific features (yes, even if said features are revenue-generators).

The purpose of Gamification is far different, both for the user as well as the organization.

While we may have, initially, placed more emphasis on the gaming mechanics and how to make it more fun for the user and enticing them to return to – well, play some more (we call it engagement, to make sure we think we are doing more than just bringing them back for our purposes), the value for both of them lies in the other part of Gamification: behavioral sciences.

For the organization it is definitely not only about bringing the user back through play to participate more – it is far more valuable to be able to study the actions and outcomes while users are in the site. Indeed, the value of identifying a user, their knowledge, their likes and dislikes, then follow them in their online work, and use that information to create better profiles, better knowledge, and better experiences is nearly invaluable.  Until now, we had to rely on focus groups or tracking tools (none of them very effective or timely to provide information) to learn part of that information – and even then, we never knew how reliable it was.  Timing of the events was conditional to when users agreed to do it, within limited time events we setup, and their actions were biased and influenced by them knowing they were being observed; it was not natural behavior.

It is far more reliable to observe a person at play (or work, or acting out) than to ask them how they do it.

The ability to understand not only the actions in the site, but the reception from other users, the value they bring to the community, and to aggregate all this information into a reputation score is far more valuable that simply bringing them back.  Observing and learning from users as they “play” is what brings the value of learning and understanding about the user to life for the organization.

On the other hand, the user can be certain that not only is the organization willing to bring them back – they are also interested in learning more about them, how they work, what they want and say, and who they are – and turn this information into more personalized, better experiences for them.  They also get instant feedback, via many of the gamification mechanics like badges, rewards, and scoreboards, and learn quickly how valuable each action is to their communities – and eventually even the organization.

This, however, is not simple to do – not easy to track.  The requirements for a gamification engine to work properly, and deliver value to both participants, are multiple and most of them very complex.  This is why a gamification engine is not only needed, also necessary.

Throughout the next few months I will take the time to explore in more detail all these concepts of exchanging value, increasing and using reputation, and delivering the ultimate goal of Gamification: changing habits.

If you join me, both here and in the webinars, we can explore it together. You can start by registering for the first webinar on March 27^th.

What do you say?

If you are interested in why multitenancy should not be an item of discussion, then read on.