Customer Value Management

There’s a famous Hollywood story about Jeffrey Katzenberg, the SKG film mogul, who has been known for his obsessive work habits and his demands of the same from direct reports. It was said he had a sign on his wall that read: “If you don’t come in Saturday, don’t bother coming in on Sunday.”

 

Whether or not its true, it’s a good idea to plainly state the rules that a company will insist on when it comes to marketing, specifically customers and email. The days of plaques on the walls have been thankfully replaced by on-board training, company mission statements, Salesforce.com and websites, but I wonder how many companies have actually set in the stone the rules that are absolutely unbreakable when it comes to customers and how they will be communicated with email or other outbound channels. For example: Don’t blast and broadcast! No emails without opt-ins. Respect frequency requests. Honor unsubscribe requests. Communicate value. Make it special. Our whole series of email improvements could serve as an example of these rules. Every company will have its own spin on these rules, but it’s most important that you have them for two primary reasons: 1) the person often responsible for creating the email content may not be privy to the big picture and 2) because after all the people who are receiving the emails are often our good to best customers whom we should respect.

 

I recommend that every company demand that sales and marketing stakeholders meet and decide on what the email communication rules will be. They should then be readily accessible not only to sales and marketing but to customers as well. If customers know a company is acting in its best interest, they will logically be more comfortable exchanging the information necessary for you to execute an effective email campaign. This is especially important for retailers. Rules such as “we will never send you more than one email a week” or “we will always provide value” signal and formalize how you are going to treat customers. Additionally, the rules can come with a promise of “let us know if we are breaking our own rules; we want you to let us know.”

 

Customer rules accomplish the following three important best practices for all marketing, but especially for email marketing:

 

They formalizes executive buy-in. Sales people especially will want to pressure email rules to try and gain extra revenue. If they are given an opportunity to participate in setting the rules they won’t be able to break them as easily. 

 

They allow email tasks to be more effectively delegated. Posted rules will allow lower level managers and assistants to execute email programs with confidence. The margin of error is significantly reduced.

 

They establish a commitment to discipline and customer centricity. Like the Katzenberg sign mentioned earlier, words have a spirit and intent. Committing to email customer rules goes beyond words. They convey a higher purpose for email. It tells employees and customers that we’re emailing to provide value rather than just broadcasting, and we’re doing it with the goal of building a long-term relationship. 

 

Here at Customer Portfolios we focus on a few different business verticals, but mostly we focus on the customers of those companies. It’s interesting to me that the press is now full of companies making a comeback, especially retailers. But it’s not the companies that are coming back. It’s the customers.

So let’s not get cocky. Let’s keep asking the right questions. Are you marketing to the number you want to hit? Are you marketing to the stockholders? Or are you marketing to the customer? The answer needs to be the customer. I was reminded of this the other day when I took home a pile of things I meant to read but hadn’t. It was an article from Roger Martin, dean of the Rotman School of Management in Toronto. He has articulated “customer capitalism” better than I ever could and it’s worth a look.

I won’t repeat the whole thing here, but Martin’s point is about evolution. Business has evolved from the CEO and business philosophy that put stock price ahead of everything. Think Jack Welch. But that doesn’t work as well as it used to. As Martin says the whole logic of it is flawed because only customer value can truly increase a company’s worth. Increase customer value, Martin says, and the stock price takes care of itself.

Sounds elegant, and it is. It is also brutally practical. But you have to do the math. Customer knowledge I have learned is based on what the need, spend and will spend more on. But it is also based on value. If I owned a business I would need to know how valuable my most important customer segments are. Sure, revenue may be up. But where is the revenue coming from? Who is spending more? Who spends less? Why?

These questions can all be answered simply and even elegantly. In fact they’re much easier to determine than price-to-earnings ratios. But the internal culture to find out and maintain customer value needs to be ingrained.