How US Air Killed the Customer Experience

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Original post date October 27, 2008

Last week I took a flight to Orlando.  I fly a good bit and have reached a preferred status (whatever that means) on USAir, so I got bumped up to first class.  Big deal!  No meal, a 30-year-old plane, a terminal and jet port that looked out of a third-world country. I know I sound like a whiner, but hang on, I have a point.

The industry that led the way on defining the customer experience in the glory days of “jetting” and customer loyalty with reward cards has lost its way. In particular, the U.S. carriers are lost in a forest of bankruptcy. As the rest of the world moves towards enhancing customer experiences and building customer advocacy, the airline industry seems to be doing everything it can to move in the opposite direction.

For example, the airline I mentioned above now charges $15 dollars for the first (yes, the first) bag checked. As a result of that brilliant money making idea, we now have flights delayed because everyone is trying to jam their bag into an overhead. Or how about charging for water, tea or coffee?  Yes, on this same airline coffee and sodas will now cost you two dollars. On the flight down the price of beer and wine was $6; two days later on the return it was $7. It’s probably close to $10 by now.

Maybe you’re saying that they have to do that because of fuel cost, labor cost, etc. Well then, how is it that Virgin Airlines, in particular Virgin Atlantic in the States is able to make money in this industry despite its new planes, expansion of routes, etc. Because Sir Richard knows it’s about the Customer Experience!

Southwest Airlines has turned this into a whole campaign. The strong, well managed will make the weak pay for this approach. The bottom line is that “nickel and diming” your passengers/customers isn’t going to make the airline profitable again. In fact, it will probably do the opposite.

What will help restore profitability to the airlines?  Well I’ve a got a few ideas: how about we start with Innovation…then good management practices…and a decent labor contracts, etc.!  BusinessWeek ran an piece on the performance of innovative companies in its September 22, 2008 edition. Companies known for delivering innovative customer experiences have an average stock return of 2.5% and revenue growth of 5.1% from 2004-07. Those with innovative business models were more impressive with a 16.6% return and 7.2% growth.

So I say to the airlines, to get flying again…innovate yourself out of this nosedive…and give me back my free coffee!

Marketing Sherpa’s B2B Demand Generation Conference

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Original October 18, 2007
I just returned from speaking at the MarketingSherpa’s B2B Demand Generation Conference in Boston and I came away very encouraged about the future of B2B marketing.
For the first time I am seeing B2B marketing attract top talent. B2C has gotten more than its fair share because of the attractiveness/sexiness of life in Advertising, the CPG industry, and other Brand/Creative centric areas. Top Schools like Kellogg have been sending their best and brightest into those jobs for years while over in the world of B2B, marketing has been seen as the red headed stepchild to the favorite son Sales.
Outside a few companies in Hi-Tech, B2B marketers were usually guys who couldn’t cut it in sales, senior executives who were parked in marketing until retirement, or young attractive women in sales support roles. But the times are a changing…big time.
With the rise in interactive marketing, new digital media, and the need to measure ROI, the world of B2B is now attracting serious talent.
Young marketers are now coming into the space. They understand how to use the tools of Web 2.0 to build communities, how to better communicate concepts and ideas, and how to measure the impact of these efforts. They are now becoming smarter at understanding buyer behavior and how to tap into it, influence it, and measure it with tools. Maybe even smarter than the chosen ones…

CMO Council’s Design & Align Report

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Original Post Date April 23, 2007

The Define & Align the CMO report is avaliable to today after 2 years in the making. The report actually turned out to be more interesting than we orignal thought based on our working hypothesis.

The year-long research by the CMO Council and MarketBridge encompassed qualitative and quantitative interviews with CMOs, CEOs, board members, senior marketers and executive recruiters throughout North America. The 80-page report, priced at $295, along with a complimentary executive abstract, is available for download at http://www.cmocouncil.org/.

Here’s a teaser of some the insights coming out of the research:

  • Confusion over the role - the casualty rate of Chief Marketing Officers can be reduced if CEOs and boards better understood the role, requirements and value of a CMO and empowered the right individuals to architect all aspects of a company’s operations around the customer experience.
  • “A Fixer Upper” – the report points out that title inflation, unrealistic expectations, flawed hiring practices, talent deficiencies, and lack of requisite business and strategic leadership skills are big contributors to the limited shelf life of CMOs. The research also points to the fact that 50 percent of executive searches are to replace incumbent CMOs who are primarily hired to fix broken marketing organizations, not drive business value.
  • R-E-S-P-E-C-T – the study uncovers startling contradictions in upper management: most executives consider the CMO a valued member of the executive team, yet they also believe many CMOs lack the background and skills needed to be a top managementplayer – a challenge numerous senior marketers share with their CIO counterparts at many companies. Additionally, in a sharp commentary on the connection between strategic value and performance, most CMOs involved in top-level decision-making get high marks from their CEOs for their overall performance, while those CMOs who remain in tactical mode get significantly lower grades.
  • Show me the Money! – nearly three-quarters of the C-suite executives surveyed consider the marketing organization “highly influential and strategic in the enterprise.” At the same time, nearly two-thirds also say their top marketers don’t provide adequate evidence of ROI with which to gauge marketing’s true performance.
  • Getting a Grade – In a clear sign of the strategic role played by marketing executives, nearly 70% of the CMO respondents to this study report directly to their CEO. However, only 40% of that number get an A grade for their performance from the CEO…most likely the ones who could demonstrate their value!  For the most part, CMOs get more respect from the boardroom than from the CEO. Most of the board members surveyed, over 80%, believe that within the next two years, the CMO position will gain greater credibility with the rest of the management team. But in another reality check, less than 20 percent also say that an increasing number of CMOs will rise to the CEO position.
  • Longer Tenure – A majority of the recruiters surveyed believe that CMOs have a shorter shelf life than other C-level executives. The average tenure of CMO respondents to this study was 38 months. (In a past report, the search firm Stuart Spencer pegged the number at 23 months). We had a professor from a top business school involved in our research…he’s a data/analytics guru. He was also familiar with the Stuart Spencer report, here’s a dirty little secret…CMO’s your tenure is longer than what SS reports.  Don’t believe the hype…they are an executive placement firm.

The research concluded that the most successful CMOs are aggressively instituting rigorous performance measurement and analytics in every aspect of their organizations, and tying those metrics to revenue and profit growth.

How the Big Agency Model Really Works

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Original post on January 5, 2007

Caveat: I wrote this post 2 years prior to joining an advertising agency. It was based on my experience working with clients and their agency “partners.”  Having now been “in the business” for close to 3 years now (with a mid-size agency), I wasn’t too far off the mark.

The Big Agency Model

Dissatisfaction with the “Big Agency” business model has recently made the news. Some are calling for a new advertising model, that the old global network model is dead.  Here’s one man’s cynical view of why and how the “game” really works.

The Game

Big agency wins account with contract “pitch team”, innovative creative, and a promise of a global platform designed to create consistent communication, production efficiencies, and improve program/people spend, etc. The client drinks the “kool aid” but then quickly comes to realize that it was a sham.

The first play of the game comes with the introduction of the lead account manager, who looks nothing like the person introduced as the account manager in the pitch.  Shortly afterward the signed scope of work, they start to doing an impression of the “invisible man.”  And the once senior and experienced account team also starts disappearing, only to be replaced by fresh faced staff of kids just out of school.

The account relationships sputters along with marginal program/campaign performance. The client BU’s and regions get fed up with the “Global Platform” (never getting the attention and team promised) and start going outside using smaller, more responsive agencies (who happened to be the talent that left the big agency).

The innovative “creative” shown to win the account turns out to be the only truly creative thing produced in the last few years and it gets recycle in multiple pitches.

Big agency realizes the account is at risk and begins acquiring the smaller agencies serving the client to secure the account.  If the client is willing to commit to retaining the agency after all this…they promise to win them an award and get them really good concert tickets.

Again, this is just one man’s opinion…I could be wrong.