There are many ways to see bits and pieces of customer data across the enterprise but what holistic strategies can you use to tap into the right data? What questions and data could actually create an unfair competitive advantage for your business? In this episode I summarize a month of customer strategy interviews and best practices. I include clips from previous guests, Custora’s Jordan Elkind, MIT’s Michael Schrage and Electronic Art’s Jodie Antypas. Finally, I wrap up with three insightful nuggets.
Please help me spread the word about building your business equity through effective customer analytics. Rate and review my podcast on Apple Podcast, Stitcher, Google Play, Alexa’s TuneIn, iHeartRadio or Spotify. And do tell me what you think by writing Allison at firstname.lastname@example.org or visit ambitiondata.com. Thanks for listening!
Key Concepts: Customer Lifetime Value, Marketing, Digital Data, Customer Centricity, Long-Term Customer Value, Marketing Leaders, Analytics, Creativity, Product Development, Audience Research
Who Should Listen: CAOs, CCOs, CSOs, CDOs, Digital Marketers, Business Analysts, C-suite professionals, Entrepreneurs, eCommerce, Data Scientists, Analysts, CMOs, Customer Insights Leaders, CX Analysts, Data Services Leaders, Data Insights Leaders, SVPs or VPs of Marketing or Digital Marketing, SVPs or VPs of Customer Success, Customer Advocates, Product Managers, Product Developers
Allison Hartsoe - 00:32 - This is the Customer Equity Accelerator. If you are a marketing executive who wants to deliver bottom-line impact by identifying and connecting with revenue generating customers, then this is the show for you. I'm your host, Allison Hartsoe, CEO of Ambition Data. Each week I bring you the leaders behind the customer-centric revolution who share their expert advice. Are you ready to accelerate? Then let's go!
Welcome, everyone. Today show is a summary of my most recent strategy podcasts, and I don't know about you, but I always find that September is a good month for starting things. Now. Maybe it's a throwback to the years when it was back to school time, but it's for me, it's a good time to reinvigorate something that I might've put on the shelf over the summer or consider that year and deadlines are coming up. So I start to push hard and take action to think about how am I going to achieve the goals that I set, but for me, there's nothing more frustrating than when your deep desire to take action is thwarted.
Allison Hartsoe - 01:48 - It's like a dog pulling on a leash with the Parkin site, and you think, why can't we get there? Why can't we just do this? Um, maybe you're an entrepreneur like me who loves to take action, but that is not everyone. And maybe your work world is more complicated than that. But before we dive into strategies and how strategies get into action, I want to remind you that you can get a free strategy download on the customer-centric CMO by texting ambitiondata to 31996. It's super easy, and it contains all the best nuggets summarized into one document. So text ambitiondata, that's all one word to 31996. Now let's dig into strategy. The strategy is the ability to tie change into a framework, actions then ladder to that framework, making everyone more comfortable about the change to come.
Allison Hartsoe - 02:49 - Now, I often use the customer-centric maturity curve to show that path from digital data collection through customer equity, and I'll include a video link in the show notes that you can watch at your leisure, but one of the challenges I see over and over within corporations is this chronic lack of strategic leadership, and that can take the form of soft goals. For example, we seek to enlighten our teams and increase our revenues. That's an example of a very soft goal, or it can be well-written goals that just lack meaning. If you want to learn more about setting high-quality meaningful goals, then I recommend reading John Doerr. Measure What Matters book. It is excellent, and you can actually hear a brief discussion about his book from his friend and excellent out of the box thinker Michael Schrage, who I interviewed this month. Here's a clip of what Michael said.
Michael Schrage - 03:54 - I wanna clarify, these are not stupid people, these are not narrow-minded people. These are people for whom their recognition and reward structure, product orientation, and focus that you described the very features and function and price and user experience issues that you described literally and figuratively get in the way of what they're really trying to do. Ironic, isn't it?
Allison Hartsoe - 04:26 - It is. It is, and we've run into that. I know exactly what you mean. In a sense, the org structure itself can be a hurdle because the recognition and reward are often anchored to that same structure. What did your division do? How much revenue did it generate? Things like that, but it strikes me as a very entrepreneurial question when you ask them to think about the customer and a broader sense. In fact it. It reminds me a little bit of the way John Doerr talks about looking for big markets and solving big problems.
Michael Schrage - 05:01 - Forgive me for being a name dropper, but I talked with John Doerr back when I was a young journalist reporter. Covering Silicon Valley for the Washington Post. I considered John to be a friend. I literally, I'm staring at a copy of this book, Measure What Matters, which I gave to my wife. I'm a huge John Doerr and just to underscore your point, I asked John just to get myself in the 1980's in the 1980's, you know, what kind of companies are you looking for at John? And he looks at me very intently behind his glasses, and he says, Michael, when we do it right, we're not investing in new companies who are investing in the new industry.
Allison Hartsoe - 05:47 - So that is why I chose to spend this month on strategy. It's time to execute. It's a good way to lay down a framework to get to that execution. So I began the month with Jordan Elkind who is a Product Development leader at Custora, and this is a customer lifetime value tool or as they might say, a tool for the customer obsessed. Now if you follow this podcast, you can probably count on one hand or less the number of tools I ever cover on this show. That's because the majority of them are bullcrap and they aren't worth your time, but there are a few out there that are actually very valuable, very good. So Jordan talks about why CLV is more than a smart strategy, and that's why this tool is good. He went on to detail a story. He went onto detail story after story with Crocs, Bonobos, Eloquii, and more of how companies, especially the new fast retailers are moving quickly to dominate markets with this strategy.
Allison Hartsoe - 06:57 - Now, if you are a large retailer who has not adopted this CLV customer-centric strategy, then consider this a shot across the bow of the geta clue boat. If you don't want to be the next poster child for the retail apocalypse, then this episode is one you absolutely must here. In fact, this show was so good. I gave it two episodes, which is something I haven't done since. Big Data Silicon Valley legend, Bob Paige was on the show this spring. Here's the summary of my interview with Jordan.
Allison Hartsoe - 07:33 - We started out with why should I care about the old strategy and I. I love what you said about the golden age of retail is kind of buried underneath the retail apocalypse. And then, uh, we, we talked about the fanatical focus on who the best customers are and how do you cater to them, how do you, I like to say how do you be of service to them and what is driving that is what we almost called the age of the CMO. Oh, I think you mentioned it came from an investor and me, I never thought about it this way, but I think it is indeed true where you see the CFO's focus in the fifties and sixties and then the operational efficiencies up through the 80's, 90's, and then now because of the richness of the customer data, the marketing teams are in the driver's seat and the ability to understand customers and what makes them tick is leading a revolution inside the company to drive broader strategic decisions. Anything I missed there?
Jordan Elkind - 08:35 - No. Think you nailed it.
Allison Hartsoe - 08:39 - Good. And then, uh, then we talked about the impact, and I love the examples that you brought through. Um, one of the side comments was that the leadership team doesn't always know what they're looking for, but when you follow the CLV trail, it gives you the right insights. And I know that is the point of the CLV strategy. I love how the Bonobos was really using CLV to lead around innovation with guide shops and having not just a quantitative expectation, but knowing that they wanted to create an experience for high-value customers that were early in their lifecycle. That type of precision is not always what we see in customer experience, but it is possible with CLV strategy, and we talked about Eloquii and thanked God they're just getting on top of talking to customers. There's always such a gap with large companies, especially where the act of calling customers seems like a, a huge risk.
Allison Hartsoe - 09:40 - But yet here you've got a CEO who's in the driver's seat literally on the phone with customers. And maybe that's not possible till the end of time. You know, when there are hundreds and thousands of customers that they have to deal with. But the fact that there is such tension to it and the fact that they're listening and trying to qualify that feedback much more than just an initial survey is a great way to empower their product development and that's exactly what marketing did. They heard, they found, and they went and empowered product development changes around fit, and then I think later was the example about the returns and the wedding dresses. What a great story and in that respect then we talked about Crocs and their marketing angle and how strong they were in strategy and the combination of maybe your traditional CRM, direct mail kind of marketing at attaching that known information to ad tech in order to form a strategy that helps them understand what they want their business to look like and who they should be acquiring.
Allison Hartsoe - 10:47 - Even if they don't know exactly everything about that customer. They can take the known high-value customers and feed that into Facebook and Google to drive the right kind of look-alike models, and that is, I am seeing more leaders do that where they're getting that combined strategy together. Anything else you want to add there?
Jordan Elkind - 11:09 - No, I was just taking a quick look at yours. Really. We talked about supernova guide shop, and they said maybe they have like 8 to 10 locations nationwide. Well, boy was I wrong because they have almost 60 locations. So this has been a really impactful strategy for that, but it just further underscores the centrality of customer lifetime value in their strategic planning and everything you said about cruxes right on another grade.
Allison Hartsoe - 11:35 - Yeah. The examples are powerful and the returns on the investment in these examples, I mean we talked a little bit about at the beginning, but in other shows we've done there, the returns are just. I almost never hear about it. Examples where somebody leads with CLV and they get at least a seven x return on what they spent, and in some cases, the return values are in the hundreds, and they're always talking multiple millions of dollars. So this is a powerful strategy, and about that, with what you do next, you know the consolidation of the customer data. We did a show previously with Joe Megibow, and he talked about how pulling the data together across the different profiles, the customer profiles is challenging, and what they did, we talked about modeling, and there's a previous show with Dan McCarthy as well as Pete Fader, where they talked about the detail behind a predictive lifetime value, what makes that work and some of the enrichment profiling that works alongside that.
Allison Hartsoe - 12:35 - And then the test and learn mindset. Uh, we heard that in previous shows, both from Laura Bowden at Bain and Brooks Bell from the testing company. Brooks Bell about how that test and to learn mindset is such a critical piece for the leaders. So Jordan, I, I think we've, we've really nailed it, and I loved everything that we talked about in the show because there's so much value in a CLV strategy. I feel like if you just try, you can hardly go wrong.
Jordan Elkind - 13:05 - Well, that's certainly the way that we see it. Uh, we're, we're team CLV all the way. Um, and I, I will say it can seem like impossible mountain to scale for companies that are just beginning to think about this. Um, which is why that is the last thing that I would leave folks with is this crawl, walk, run methodology when we embrace this and everything that we do at Custora. Because the reality is it's quite easy for organizational fatigue to set in. This is why we all need quick wins that I've described. Some absolutely incredible applications of customer lifetime value. I mean really transformational stories. What happened highlighted is the simple, easy steps that we see companies doing, kid making impact, even if it's not as big as redesigning your supply chain or refitting your products or changing your channel strategy. But really this is why, you know, the most important step is getting your customer data together, looking for insights and seeing where it leads you. I guarantee there will be some low hanging fruit that will help make the case clear as day for how CLV will greatly.
Allison Hartsoe - 14:14 - I completely agree. Then I spoke with Michael Schrage. Michael is a research fellow at the MIT Sloan Center for Digital Business and the author of about seven bucks and an all-around big thinker. Michael builds on the classic question of what business are you in by loading up an equally powerful question behind it. Who do you want your customers to become, and this is also the name of his book which you can find on Amazon and some other sources. Buried in that innocent question is an entire framework for innovation around your customers. He echoes as others have on this show that not all customers are equal. Yes, we know that, so paying attention to the right customers and what you're asking of them will lead both you and your customer base to high degrees of mutual happiness, and that's really what we're after is we're trying to create that win-win where the company wins and creates a really strong trait of value for the customer that ultimately takes the form of equity, customer equity for you and the smart innovation that you deliver for your customers.
Allison Hartsoe - 15:32 - There are many dimensions to the question which Michael Schrage calls The Ask, including the dark side of The Ask, which I found highly entertaining and both Facebook and McDonald's have run into this. Don't you do that? Here's the summary of my interview with Michael. We've covered a lot of ground, and of course, I highly recommend the book, and we'll be linking to that with the show notes. But let's say that I've, you know, I've, I've grasped the concept, and I really like the direction of asking who I want my customers to become. But you know, it's a simple question with a lot of nuance behind it. What should someone do first, second, third, if they want to execute or try to apply this?
Michael Schrage - 16:19 - Well, I think putting aside the book, I think it's actually fairly straightforward. I think one wants to be careful about the level of abstraction and the level of specificity, but when I work with it's a medium-sized organization. I just wanted to take a step back here. Organizations that have a lot of data, there are different ways you can begin more. You know, the more options you have in that regard, the more history you have. You know, Winston Churchill online, they want to, you look back into the past, the easier it is to look out into the future because there are certain fundamentals that don't change in this certain fundamentals around which a lot of change takes place. So if I'm asking, who do you want your customers to become? I'm going to be talking to somebody. They're really interested in this. I'm gonna say so who's the customer yet?
Michael Schrage - 17:15 - You love. Tell me why you love him. You make a lot of money from them. What's the matrix if you guys, for people literally correct. We're closer over the next few years, over the next two years, how would you want your infraction and to change them? How do you want to transform them? How do you want to make them better? What do you want them to say about you? Not In terms of your product, about, about what they're capable of doing now that they weren't capable of doing that? Right? That soliloquy out for me. Do that case. Do two or three use cases from; I want you to begin in the specific and then abstracted to a segment. I want you to do that with your best. I want you to do that with your typical, oh, let's have some fun. Let's look at your churn folks. The folks who've left, why?
Michael Schrage - 18:10 - How would you transform them? How would you legitimately keep them on for another year before they left you in a way that doesn't compromise you at all? Let's deal. You know the phrase which people seem to think comes from paper pushing the envelope is not from the paper industry, it's from airlines. It describes the trap is always around which planes perform, you know, where they go into stalls, etc. Okay? You want to explore the envelope of who you want your customers to become. You want to rethink what segmentation means because traditionally segmentation is about a moment in time. This moment in time, I want you to think dynamically, what's the way you want that segment to evolve in 18 months? The real world example, and how do You learn from it? My favorite obvious example is Netflix. Netflix never forgets, Netflix didn't begin as a digital streaming company. It began mailing CDs. The original delivery system for Netflix was the good old US postal.
Allison Hartsoe - 19:22 - Well, exactly. It's hard to remember that
Michael Schrage - 19:24 - Depending on your dealings with it. Yeah, and if you were more realistically but not so good old US postal service. Okay, so the the. There's a key point I want to make here, which is when they switched over, they were monitoring if he, you know, it would recommendation and state paid a lot of attention to how people actually behave. What did they observe? They observed a certain segment of their users. Did what good would watch for an hour a day for 90 minutes a day. They would binge watch for three or four hours; binge watch him talk about the dark side of The Ask,
Allison Hartsoe - 20:02 - Oh right, right.
Michael Schrage - 20:03 - If we want to actually produce stuff as well as acquire stuff, how might binge watching behavior in the form a series that we want to run because clearly would be more arms if we didn't produce a series that didn't appeal to our binge watcher.
Allison Hartsoe - 20:21 - Exactly. Exactly. So those questions and that order of operations, of exploring the envelope, it, it seems like that's, that is in itself such a huge piece for people to bite off. And, and I love what you said to, to write it out. You know, we're not talking about building a powerpoint presentation. We're talking about really rich deep thinking about that segment and understanding them and what you want them to, what you want them to look like in the future, not just this particular retroactive moment in time. And what particularly drives me crazy is the demographics slicing. Yeah. Uh, I would like to think that anyone who listens to this show is so far beyond demographics slicing. It's all about behavior and attitude and, and aligning with that, what they're telling us all the time, what they want and what they want from us. It's very difficult for businesses to listen. And what you've asked them to do is to listen.
Michael Schrage - 21:22 - Well, the line that I like to use to design how you rustic I want to conclude with is one that I've used successfully in exec ed classes and with clients. You want to make your customers more valuable, and the design is making customers better, makes better customers.
Allison Hartsoe - 21:47 - Next step. I interviewed Jodie Antypas, the VP of Research at Electronic Arts. Now Jodie isn't a big one to come onto the show and toot her own horn much, but you should know that not only was she the best speaker at our conference two years ago and we do score and rate all of our speakers. She is just a sharp thinking innovator on the front lines of customer research, particularly the customer's voice. She is a force of customer data to be reckoned with. So in this interview, Jodie helps us understand how customer listening strategies have changed and I can tell you one of my pet peeves is when I see companies slicing by demographic information first because this routinely misses the point about customer data. For example, I did a quick google search and came across this headline, Hispanic retail sales stumble as immigrants stay home and hoard, which ran on NBC news.
Allison Hartsoe - 22:50 - I'll include the link in the notes. I couldn't believe this story actually got press. This is just garbage. Now, the reason this is garbage because the basis of the story is actually that sneaker sales are down and then the writer extrapolates a whole host of horrific conclusions, which again, I can scarcely believe that passes for credible journalism and I didn't have to look very hard to find this. Now what Jodie is saying and the reason why her interview is so powerful is she said; customer centric diversity is really about attitudes, behaviors, and motivations. Notice what was not. There is a race because frankly that's too large of aggregate and Jodie takes us deeply into the world of rich, fulfilling customer-centric research to show how to really listen to your customers and how they use it at ea. Here's the summary.
Allison Hartsoe - 23:52 - At the top of the show, he talked about why customer-centric research and I'm one of the things you said was that online tools are making it so much faster and, and very nimble, but you still have the importance of getting a good clear sample, and you're probably the business strategy as we talked about at the end as well. So kind of knowing what you're going for, having the clear sample to answer that question and then the online tools make your life easier, but the online tools don't answer the business question for you or inherently give you the right sample. You have to know what you're going for in the first place. Um, we also talked about mobIle phones making it possible to do real-time research. And what I really loved in this section was the target audience identification that you're looking for different audiences and the heterogeneity of the whole audience group when you're doing customer-centered research.
Allison Hartsoe - 24:48 - And that might be a shift in how we thought about research previously when it was really demographically focused. Today we're really looking at the, um, you know, did they stay engaged in the game? We're not focused so much on just selling the game, but on how do we get them to purchase the next game, which is really building that longterm relationship. So I really love the angles that you came up with on the customer-centric research, and I think it's, it's not exactly subtle. I still hear people talk all the time about demographics, and it's not that those aren't important, but as you illustrate in the examples, the behavioral, attitudinal diversity and motivational diversity, am I right to say that that would be predictive or more predictive than our traditional demographics?
Jodie Antypas - 25:37 - Oh, absolutely. We find much more on motivation and attitudes, and we do on traditional demographics.
Allison Hartsoe - 25:44 - That's what I thought. And then we went into three examples. We talked about FIFA and the ethnographic researcher. Um, and, and this was so interesting because you're looking at the knowledge, again, a really interesting slice of not just looking at how often do they use it or you know, what geographic area are they from, but you know, is there a level of knowledge low or high, and then we talked about like, like a flower unfolding and using that as the tip of the spear for research to then find interesting insights behind it. And that also led us into a little bit of discussion about avoiding confirmation bias and making sure that you're listening for what people are saying this. You also echoed at the end when you talked about the customer isn't wrong, it's really the customer telling you their truth. I think by listening to the customer's truth, you help avoid confirmation bias as would that be true?
Jodie Antypas - 26:44 - Yep. Definitely want to hear what the customer is saying in their own words. Yeah. Lots of screening and preparation goes into groups like that.
Allison Hartsoe - 26:51 - How much screening goes into that? Is it like a 30-minute call or is it, you know, you really deeply digging before you pull them in?
Jodie Antypas - 26:58 - Um, it's typically a questionnaire, and then a follow-up an interview, and then again we rescreen people on site before they come in. There's a lot of people that want to be a professional focus group participants. We don't want people like that, so we try to trick them and weed them out and make sure they don't actually know what they're coming in to talk about.
Allison Hartsoe - 27:16 - Very good, very good insight. Cool. Finally, towards the end, about the favorite customer-centric research methods, the brand research and the essence, the NPS research, which is always under fire, but I heard the same thing when we, when we talk about CLV on this show, there's a really nice connection between CLV and NPS research and pulling that together to get a sense of satisfaction and value from the customer. And that leads right into the core player metrics that you talked about. Were you looking at NPS unique users to get to scale and volume as well, session days, which is unique to electronic arts, but it's really about engagement. And then of course average spend per player. So all of these things really focus the research into becoming a powerhouse for your organization, and it sounds to me like by getting the organization to be customer-centric, you have empowered your researchers to start the right kind of conversations and then bring it through the whole organization because everybody knows what they're accountable for. Is that fair?
Jodie Antypas - 28:31 - Yep. I Think that's definitely fair. We definitely have shifted the focus more to the player and accountability to the player.
Allison Hartsoe - 28:40 - No finally. What did you take away from all these experts? Well, first, to pull the right triggers for growth, you must see an understand each customer individually. Understand who the right customers are. You need a sharp, yet fluid technology for this, and Custora is this. I do not say that lightly. They are the only company I have seen outside of zodiac which was required by Nike earlier this year. That is doing the math correctly and injecting the results into your existing systems. Custora is the bomb. Second, reframe your strategy by thinking from the customer's perspective, not the product perspective. It's harder than you think, but asking who do you want your customers to become, can really help reframe your thinking, and third, research, particular customer research has changed to emphasize attitudes and motivations because these are strongly predictive and that deemphasizes demographics, which cannot be the tip of your data sphere.
Allison Hartsoe - 29:50 - Now, if you'd like to talk more about this subject or perhaps find a way to improve your own strategy, you are most welcome to reach out to me at email@example.com or at @ahartsoe on twitter or Allison Hartsoe on LinkedIn. Again, you can get a free strategy download of the customer-centric CMO by texting ambitiondata to 31996 or check out our maturity scoring tool on the ambition data site. Now, as always, links to everything we discuss our at ambitiondata.com/podcast, and I want to thank you for joining me today. Remember, when you use your data effectively, you can build customer equity is not magic. It's just a very specific journey that you can follow to get results.
Allison Hartsoe - 30:43 - Thank you for joining today's show. This is your host, Alison Hartsoe, and I have two gifts for you. First, I've written a guide for the customer-centric CMO, which contains some of the best ideas from this podcast, and you can receive it right now. Simply text, ambitiondata, one word to 31996 and after you get that white paper, you'll have the option for the second gift, which is to receive the signal. Once a month. I put together a list of three to five things I've seen that represent customer equity signal, not noise, and believe me; there's a lot of noise out there. Things I include could be smart tools. I've run across articles, I've shared cool statistics, or people and companies I think are making amazing progress as they build customer equity. I hope you enjoy the CMO guide and The Signal. See you next week on the Customer Equity Accelerator.