At the risk of repeating myself, consider the following statements:

1. Never before have brands had so much data about their customers or capabilities to analyse this data
2. Never before have we had customers so willing to interact with brands and each other online (social media, user generated content)
3. Yet, we are the least connected that we will ever be...

It is this last statement that really draws pause from me. As marketers we are really at the very early stages of a journey.

Now, whether you buy-in completely to these statements or not,
there are already some trends that are well established - one being the
rise and rise of "text analytics". I can't say that I'm a big fan of the
labels we give these things but I guess we need the shorthand!

From the organisation's point of view, the analysis of structured customer data has become reasonably mature task and whilst many could do it better it is hardly the driving force of differentiation it once was. You only have to attend the latest data analytics conference in your local city and observe the same old case studies to come to this conclusion.

Structured data is the province of traditional CRM and transactions based systems. This data is very good at providing context - WHO, WHAT, HOW, WHEN and WHERE. It tends to address PAST behaviour and interactions with your brand. And it is usually (though not always) good at positively identifying your customers.

Much of the unstructured data that is now being generated through social media has different qualities. By definition it is being VOLUNTEERED directly by your customers or prospects - rather than forced into a contact centre process. It is a very immediate channel - it happening right NOW whether you like it or not. It can be about previous experience with your brand but it far more likely to address brand sentiment and future intent than other data sources. It tends to be more about the WHY rather than the contextual data provided by CRM systems. And when matched with critical structured data such as identity and ratings it can become an invaluable source of insight to the brand. 

You may have also noticed that it is exploding at a great rate of knots - I believe to the point that that it will push the humble customer insight profession into a completely new league.

The down side to this explosion of potential - you need the tools and experience if you are to genuinely ride this wave and not drown in the data.

So what does text analytics cover?

Text analytics is an umbrella term that covers a range of techniques and practices including natural language processing, text mining, relationship extraction, classification and tagging, visualization, modeling and predictive analysis,

In the customer engagement programs that we are conducting with our clients (primarily Net Promoter Programs and branded online communities)  it is this unstructured data in the form of 'verbatims' or open-ended comments in combination with the structured data of identity and ratings that produces the value for the brand.

As the volume of verbatims increases the challenge becomes, for example, how to:

• tag sensibly and consistently through an automated or semi automated process
• identify emerging drivers or trends in the data
• present visually particularly to front line staff or the less analytically inclined in a way conducive to follow-up action

And by the way, the practitioners secret with unstructured data once you have met these challenges... it is a whole lot more fun!

"Reach over 350 million active users on Facebook. Learn how to connect your business with real customers through Facebook Ads" - so goes the Facebook online pitch.

From a marketing viewpoint, when you look at the large public social sites such as Facebook, Youtube, Twitter - are you just looking at traditional mass media advertising applied to a new channel?

Despite all the potential of targeted and measurable marketing through social media, perhaps even genuine conversations between brands and consumers; the big budgets have gravitated to the same mass media mentality. A case of "when you have a hammer, everything looks like a nail?" 

Perhaps it just means that we have lowered the bar on so-called "above the line" broadcast advertising. What's the difference between a 30 second ad on the Superbowl broadcast and an online ad placed before 350 million Facebook users? Even with attempts at online targeting. Or any amount of advice about so-called influentials and "going viral"...?

On the consumer side of the equation there is another factor that tends to lower this bar...they (we!) only have so much attention.

Brands can attempt to carve out a presence on large social sites but the competition for attention is intense and the brand message often out of context.

Individuals who are lucky enough to succeed, are invariably converted from conversationalists into broadcasters - you simply cannot maintain personal relationships with 50,000 followers on Twitter or friends on Facebook.

For brands, the dilema is more complicated. If you are lucky enough to create the buzz, generate the interest.... you may have the resources to service this interest but who are these prospective customers? And how do you generate an ongoing conversation without the distraction of Facebook, Twitter or any other social cocktail party that happens to be site du jour.

We have talked previously about our preferred 'hub-and-spoke' approach to this challenge for the brand but the continued growth in these large social sites does underscore their mass media (one-to-many broadcast) qualities as places to recruit but not to dwell!

As Grant Johnston (www.chiefmarketer.com) observes - the new media landscape "implies that mass marketing is not limited to traditional channels and more measurement MUST accompany all media spends, regardless of media used." He also reminds us of direct marketing disciplines such as testing.

However, in the brave new world of social media, I believe that we need to go further than this - we should also be asking "where do we want the ongoing conversation to take place?" and "how are we going to identify these individuals?"

Not too long ago one of the people I follow on twitter posed the rhetorical question; ‘when is the last time your loyalty programs showed it was loyal to you? ‘ Mmmm go me thinking.

Loyalty program operators, once the program is up and running, tend to focus on the ‘earn’ since this is the customer behaviour the program is meant to encourage. We like to keep track of how many points are being earned and how this translates into longer term customer value and short term profits. The CFO, who has to make balance sheet provisions for the points being accumulated by these valuable members/customers is generally single-minded in her focus on this key driver of program expense. And I am sure she often secretly hopes the points will ‘break’ before they are converted to rewards.

But this view is self serving surely. It is us watching customers behave the way we want them to behave (if we have designed the program well).

What about the ‘burn’?

(Please excuse the loyalty program jargon, ‘burn’ is shorthand for the exchange of points for rewards, also known as a ‘redemption’ i.e. when you redeem points for rewards).

We do loyalty program ‘audits’ and one of the common, generally surprising to them insights we show clients is the impact of redemptions on their program members. By looking at data from literally dozens of programs, we can safely predict what impact the redemption event has on the behaviour of your program members.

‘Redeemers’, (those members who remember receiving a reward in the last 6 months or so) versus ‘non-Redeemers’ of the same value to you;

• stay with you longer, 30% longer in credit card programs in Asia Pacific for example
• like the program more, we have seen 20% point Net Promoter Score increases, comparing cohorts before and after redemption for example
• talk about your brand positively, Colloquy found that 68% of brand champions are so because of the reward program they are engaged with
• in retail programs that issue vouchers as rewards, redeemers measurably increase their response to your point promotions, to accumulate bonus points
• in voucher programs, redeemers spend their voucher then keep spending, making redemption baskets significantly richer. The smaller the reward voucher the larger the sales lift is proportionately (within limits)

Sounds obvious I know, but I see a lot of programs where the redemption part of the process is given insufficient attention, where there is no careful (data driven) matching of the rewards available to the needs/preferences of the redeemers, where there is no use of recognition as a supplementary reward that requires no points but engages customers impressively if genuine…

And where there is no invitation to a conversation just after the redemption when customers are most likely to be open to a relationship offer from you. I am still surprised when I see consumer loyalty programs that are not tightly coupled with a branded community where customers can converse with the program and each other.

Redemption is how your program shows it is loyal to your customers, it deserves more attention than it often receives.

The great challenge for contemporary marketing is summed up very nicely in Rethinking Marketing (Harvard Business Review, Jan 2010):

'Never before have companies had such powerful technologies for interacting directly with customers, collecting and mining information about them and tailoring their offerings accordingly.

And never before have customers expected to interact so deeply with companies, and each other, to shape the products and services they use.'

And to really put this into perspective we, as consumers in 2010, are at a stage where are the least connected we will ever be...

Now, as a group who have worked both on CRM programs (the inside-out view of large corporations) and on social media programs (bringing the outside-in consumer viewpoint to large corporations), we understand one of the best kept secrets about this marketing challenge. It is the proverbial 'elephant in the room' and is often missed by social media experts and marketers more generally.

Simply, it is that the primary challenge is not social media or the willingness of consumers to engage with you as a brand. There is an abundance of evidence now that consumers will engage with your brand online, that this does not have to be an expensive exercise and that with persistence and humility towards your customers you will start to make significant progress.

No, the real challenge is the internal challenge and how far you can actually leverage that consumer engagement and feedback. The real challenge is the very nature of our organisations and the role that marketing plays within them.

From Rethinking Marketing again:

'Companies need to shift their focus from driving transactions to maximising customer lifetime value. That means making products and brands subservient to long-term customer relationships. And that means changing strategy and structure across the organisation - and reinventing the marketing department altogether.... 

The key distinction between a traditional and a customer-cultivating company is that one is organised to push products and brands whereas the other is designed to serve customers and customer segments, or at least tightly targeted at thinly sliced segments.

In the new customer department, customer and segment managers identify customers' product needs. Brand managers, under the customer managers' direction, then supply the products that fulfill those needs. This requires shifting resources - principally people and budgets - and authority from product managers to customer managers.'

These changes need to be supported by a new set of customer metrics (hence our focus on Net Promoter Score initiatives) to gauge the effectiveness of customer strategy and guide the allocation of resources.

Some cautionary advice about this post - don't wait until you have customer-centred organisation structure before you embark on your social media journey! You could be waiting a long time. Just be aware of the internal implications of your social media baby-steps. The reality is that engaging with your customers online is likely to be one of several triggers for important changes internally.     

Well, I guess it was just a matter of time... ever more sophisticated consumers looking to exercise their economic muscle and progressive companies providing them with the platform to do so. 

We have talked about the rise in consumer power before; what is new are the brands that have not just seen the writing on the wall but turned this into a positive. 

In launching Dell Swarm, Dell appears to have provided a platform that allows you to group together ("swarm") with others (friends, colleagues etc) for the specific purpose of purchasing an item that has been discounted for a volume purchase by that group. The more people that join the swarm the bigger the discount.

I have seen third party (middleman) efforts to assist collective buying and no doubt we will see "buying clubs" also initiated by consumers themselves but for a magnetic brand in the right category - this is a clever move. Incremental sales utilising the enthusiasm of engaged customers, their social and bargain-hunting impulses - all the while maintaining a conversation at your place!

A sign of things to come.

I recently undertook the Net Promoter Score (NPS) certification course, the online version offered by Satmetrix. Overall, quite a good experience and the knowledge will come in handy as we work with our clients’ relationship strategies.

There is much that is ‘traditional’ CRM in the NPS program methodology (with no negative connotations implied), so my years at Peppers and Rogers Group on projects where we struggled to make companies more ‘customer-centric’ were relevant. In fact the organisational change processes outlined are very similar to the framework we built (way back in the early 2000’s) and still use for this type of project – it was originally borrowed from McKinsey and others (in my case) I think.

To successfully change the way an organisation looks after and thinks about its customers requires work. This work sets out to achieve;

1. Front line staff teams that understand the rationale behind a customer-focus and the impact it has on their daily work. This includes establishing a single view of customers, i.e. a customer segmentation and treatment plans that are useful in guiding staff to treat different customers differently (and appropriately). Reichheld says basically the same thing when he says that if your segmentation framework does not explain the difference between your Detractors and your Promoters it is not useful for you.
2. Staff that have the skills required to provide the new improved customer experience.
3. A remuneration system that unambiguously rewards the new, desired behaviour by staff, not the old
4. A management team that publicly demonstrates commitment to the changes – asks about customers first and regularly.

CRM strategy projects tended to revolve around the definition and then implementation of these deceptively simple things. Deceptive because they sound simple, but several of my projects took better than 12 months, some are still effectively going 6 years later (and not because I am a slow worker). Keeping project teams focussed for these long periods, with a lack of short term leading indicators is just plain hard.

Relationship marketing generically uses customer loyalty, value, equity and profit as measures of success, correctly so, but many of these dials take a long time to move. Making them difficult metrics, especially in the impatient environment of quarterly reporting and short-tenure CEOs.

The NPS folks make a distinction between top-down and bottom-up implementation. Top-down measures customer satisfaction with the overall relationship, bottom-up measures customer satisfaction with the particular transaction, or interaction.

Top-down does not strike me as being very different from traditional measures of customer satisfaction with a brand.

In bottom-up is the magic. Bottom-up involves mapping the customer transactional experience, identifying the moments-of-truth in that experience, then asking the NPS recommend question and ‘why?’ of enough customers at that moment of truth to get an indication of what is happening in the process. Short and sharp. As scores vary with transaction variables you can do a root cause analysis (guided by the customer verbatim responses) to determine what best to change to improve the customer experience – and therefore likelihood to recommend.

Today.

And measure how you are doing tomorrow.

The difference this regular and immediate measurement of customer reaction makes to work-force transformation projects is significant. It makes them action oriented, execution projects for customer facing staff, not consult-speak heavy management fads that will pass as long as we keep our heads down and ignore them…. especially if closing the loop requires key staff to talk with unhappy and happy customers personally and often.

Exciting.

My only, presumptuous, suggestion; the Customer Engagement Management industry has a body of tools available that could be productively integrated into bottom-up NPS. These include moment mapping, peak-end experience design and touch point mapping…. Satmetrix talk about a ‘customer corridor’ in describing the over-time interactions customers have with you, this corridor is already a consulting industry in its own right; borrow from it.

Here we are in the run-up to Christmas and the New Year, so I thought I would jot down the things that I found amusing, noteworthy or just plain strange about the business we are in for the past year. A personal list and personal opinions...

1. The “John Farnhams” were interesting – those who had several going away appearances. Telstra retired on twitter and came back, they also retired a blog and came back. I admire their capacity to learn and persist. UBank retired a community and came back on twitter where I think they do a good job, as does their CEO. IAG ran a customer co-creation site for 6 months and came back with a shiny new company called The Buzz.
2. The Echo Chamber that is Sydney’s social media ecosystem got larger, got its own association and we had a great evening with MC Hammer. Proved that a mix of alcohol, egos and twitter  produce embarrassing tweets as pundits strive to prove who is cool. Thank god there is not a single customer involved to see us social media gurus behave like that… hang on, where were the customers?
3. We had our controversies with the real Steve Conroy (Telstra again), a lost coat campaign and the world’s best job. I am not sure if the debate about being authentic or ‘pragmatic’ in social media did much to change anyone’s views, but it did focus my thinking on the Word of Mouth Marketing Associations code of conduct. ROI – be clear who you represent, state whose opinion this is and declare your identity
4. Sportsgirl launched an online customer community with some fanfare and claims of being the first, while Woolworths quietly crossed the 150,000 participant mark on their Everyday Matters, Huggies engaged thousands of Mums, Wyeth relaunched their Mum’s Club and an inner circle advisor panel, IAG designed a new insurance company with several thousand savvy customers, Essential Baby and Bub Hub continue to grow, Hungry Jack’s Burger Club members critiqued chicken nuggets… phew, thank goodness, that’s where the customers are, looking for interaction with people like them, with brands they are interested in. Go figure.
5. During a presentation for Jen Storey in Brisbane I had an epiphany of sorts. There is a reluctance in many Australian companies to open up and dialog with their customers through social media that exceeds any real regulatory compliance need. It is generally couched as ‘but what happens if they say really negative stuff and it flames out of control?’ When did Australian business get to be so scared of its customers? Should they be? If they really are scared, some honest introspection about why they are not fixing the things that would cause their customers to flame is called for, surely? Perhaps we need a few good dramas to kick start conversational marketing here – Dell Hell and the Comcast sleeping service man gave these 2 companies no choice but join the conversation and they are now both cited as the profit making social media experts. Companies genuinely determined to improve their customers’ experience and engagement love social media because it is an efficient and scalable way to find out what to do and how they are doing. Companies without the will to fix things, hoping that sucker customers will not find out until it is too late should be afraid of their customers, they can now tell thousands of their peers how bad their experience is with the organisation. Be very afraid or embrace customers for goodness sake.
6. I had the good fortune to work with Estee Lauder in Asia Pacific during 2009. A really classy group of people passionate about their customers. I mention this because their social media campaign strikes me as one of the best and most innovative of 2009. Free makeovers and photos to produce the best social media image you can have for your profile. Clever and shows an understanding and empathy. (Not ours btw)
7. Age of Conversation 3 – the book with 300 chapters each written by a different author from around the world was completed. Money raised goes to charity, so stay tuned and buy a copy once it is published please. Look for our chapter on how we think the old media folks are looking for a 30 second spot replacement as they search for the mythical ‘influential’ who can virally sell any product their clients retain them to sell.
8. Don Peppers made a welcome visit to Australia to talk about customer loyalty and Woolworths’ Everyday Rewards. His message still resonates with marketers, but I suspect implementation has not got any easier for most of us.
9. The role and responsibilities of the Online Community Manager justifiably received some attention and we participated in a good round table  session with other community managers in the Fairfax Sydney offices.
10. And finally, in 2009 we went through the process of getting certified by Satmetrix as Net Promoter Score practitioners. We have used NPS in our community management function for several years as a ‘bottom up’ measure of how well we are doing at keeping customers interested and engaged in our communities and programs. This certification (will, it completes in Feb ‘10) confirms our understanding and gives us access to the creator’s approaches and methodologies. It was also fun to see the implementation and organisational change processes we learned for CRM (and TQM before that) are still required if we want to move customers to the centre of our company decision making.

Merry Christmas and a prosperous New Year

"The future is already here. It's just not evenly distributed." (William Gibson)

And so it is with organisations and brands as they experiment with social media how best to operate in the (increasingly) connected era.

I was reminded of this by the recent announcement from Salesforce.com introducing Salesforce Chatter - sort of Facebook for the enterprise or enterprise collaboration meets social networking. The reasoning is that while social networks have provided consumers with a new way to gain insights into what's happening in the world, enterprise collaboration is almost non-existent because content, apps and people are disconnected and not part of the same conversation.

Now even if you take away the usual hype that software vendors usually carry on with - this is a clever offering and one that will evolve further - because it is based on demonstrated behaviour (people are already chattering!) rather than a second guess by a software engineer. It is also a platform - intended to enable the 200,000 Force.com developers to build custom social apps with Salesforce Chatter - see, I've already bought the hype!

However, chatter is just that, chatter, unless it has context. And that is the interesting challenge that Salesforce.com has promised to address when it releases the product in Q2 2010.  Employees will be able to import their profiles from sites like Facebook and form groups around topics like winning a particular deal. And bring conversations into the organisation by associating them with specific deals, accounts or groups with the use of hashtags.

As Charlene Li says, "Chatter enables presence within Salesforce. This means you'll be able to see my update "working on a presentation for #Ford" not only on my profile page, but also in the context of the Ford deal. So my salesperson will see that information on the Ford account as an update, even if s/he's not actively following me . This is about putting the conversations and social objects in the context of where they will be most useful."

Of course, it is not only Salesforce.com that is addressing a more "social organisation" - Lithium, for example. being another player who is meeting this challenge.

These sorts of platforms - with the ability to integrate social media and make it relevant in an enterprise environment - combined with those organisations that are already experimenting and learning in this environment, will be a powerful combination. The future is indeed already here for those that are ready.