Telemarketing: The Impossible Tradeoff

One of my Brazilian colleagues, Roberto Silva (not his real name), was a frequent traveler to the U.S. on business and for pleasure. He had a daughter at an American university and he visited her whenever he could. He also liked buying things at specialist outlets and, a few years back, had bought some trousers (which became his favorites) from Lands’ End.

Call center agentOne of my Brazilian colleagues, Roberto Silva (not his real name), was a frequent traveler to the U.S. on business and for pleasure. He had a daughter at an American university and he visited her whenever he could. He also liked buying things at specialist outlets and, a few years back, had bought some trousers (which became his favorites) from Lands’ End.

With his wife reminding him regularly that these favorite trousers were wearing out, he decided to buy some new ones on his next trip. From his New York hotel, he telephoned Lands’ End and introduced himself to the cheery telephonist who welcomed him back to Lands’ End. A moment later, she asked him about his daughter, how she was doing and if she had graduated from college? Stunned, he asked how she knew about his daughter and she said that the last time he had called, he had mentioned that as the reason for his visit. What could she do to help him?

She asked how he liked the trousers he had bought before. He replied that if they still had them in stock, he’d order two more pair. “Can we ship them to the same hotel you stayed at last time? We can have them to you by tomorrow evening,” she said. Of course he purchased them and some other items and when he told me the story he said emphatically: “I’ll never buy trousers like these anywhere else. There are warm, friendly people who work there, not a telephone bullpen staffed by bored and underpaid, out-of-work actors. These people obviously enjoy talking to customers and seem in no hurry to get you off the phone and you don’t have to listen to endless menu options and punch in some numbers to get someone to talk to you.”

Perhaps that’s a rather long way around to introduce the “impossible tradeoff,” the obvious cost-saving of having an automated system interact with the customer up to or beyond the point where he or she either needs or demands to talk with a human being, vs. a totally human interface which may be less efficient in terms of costs, but is more likely to have customers become “advocates,” as my friend Roberto had. Can you imagine someone saying how happy they were only having to make four menu options instead of 10?

Banks and credit card companies seem to be in competition with mobile phone operators to win some prize for making it difficult to talk with anyone (and making you wait the longest time if you want to). Internet sellers are often even worse, hiding their telephone numbers in the most secluded nooks of their websites. The recent United Airlines disaster of dragging a passenger off of a flight to free up some oversold seats is a horrible example of how a focus on efficiency (in this case, maximum passenger loads created by intentional over-booking) can undermine customer loyalty. After that incident, it will take a long time before anyone is ever “loyal” to United again.

The ultimate question is one of relative value. And despite all of the big data in the world, there really is no way of gauging accurately the relative value of the tradeoff. How strongly the customer feels about the transaction must be an important if unquantifiable (soft) data point.

The bean-counters will assure you of the obvious saving; machines are, in the long run, cheaper than people. They work 24/7, they don’t demand raises and they don’t need pregnancy leave. Then they will argue that customers are better-served, get to speak to the right knowledgeable person faster than explaining their problem over and over again — or better, have it dealt with without human intervention. Not so for my friend Roberto, who will counter that his loyalty and the loyalty of many like-minded customers will more than make up for the savings in long-term revenue and insulation against “efficient” competition.

So where do you draw the bottom line?

It’s always a tradeoff compromise (the best solution or the worst). But I would opt for an automated answer which, first, thanked the caller for calling and second, offered a choice of:

  1. Immediately talking to a warm, friendly and knowledgeable human, or
  2. Hearing a short menu, which may speed you to the answer you are looking for.

Unfortunately, a “right” answer is impossible.

 

Endit …

Mobile’s Market Share Killed the Circus

When I was a kid, running away to join the circus was my dream of choice. The very idea of the smell of the sawdust and the animals, the vagabond life of death-defying trapeze artists and high-wire walkers and the popcorn and cotton candy conjured up a paradise almost too good to be true. When the circus came to town, it was the treat of the year.

circusWhen I was a kid, running away to join the circus was my dream of choice. The very idea of the smell of the sawdust and the animals, the vagabond life of death-defying trapeze artists and high-wire walkers and the popcorn and cotton candy conjured up a paradise almost too good to be true. When the circus came to town, it was the treat of the year.

So this gringo was really sad when The Big Apple Circus announced closure and bankruptcy last summer, ending 38 years of enchantment for kids and adults during New York’s Christmas season. Somehow, the architecturally austere Lincoln Center became a less welcoming place without the Big Apple’s happy multicolored tent dominating the foreground.

Now Ringling Brothers and Barnum and Bailey, the world’s most historic circus, founded in 1871 by the great showman P.T. Barnum, is being forced to fold its tent; victim of an age where magic is increasingly served up on electronic devices available 24/7. Quoted in the New York Times, Kenneth Feld — the 69-year-old boss of the company that owns the circus — complained about “an unforgiving marketplace. It just became too hard for the circus to hold onto its most crucial fans: wide-eyed kids and their nostalgic parents. There has been more change in the last decade than in the preceding 70 years,”

That change has drawn today’s digitally sophisticated youngsters away from the pleasures of watching real performers give everything they have to enchant the audience and earn its applause. Whether it is equestrians performing acrobatics on the backs of horses galloping around the ring at 40 kilometers per hour, an animal trainer coaxing his elephants to dance to the music of the circus band or a family of monkeys mimicking the monkeys in the audience, all great circus acts are the result of years of hard work, often beginning in childhood with circus-performing parents. Each time a circus performer goes to the center of the ring and does his act, he risks failure and, by circus tradition, must do the “trick” again until he gets it right.

Every Brazilian I’ve asked has happy memories of going to the circus as a kid — of the clowns, the acrobats, the magicians and the animals (especially the monkeys). Touring circuses are still very much a  part of the culture, and the circus tent in the middle of rural towns is a favorite subject for Brazil’s naïve artists. But like their Yankee brothers, these circuses have fallen on hard times. Circus Marambio, the fourth generation of a family circus currently performing in São Paulo has juggling, tightrope walking, aerial and clowns — all within a narrative story, “Monkey Island,” about a scientist in a hang glider who crashes on an island of monkeys. He discovers a new world, where man and nature respect and learn from one another. Intentionally or not, there are echoes of Cirque du Soleil, the international success that, since the early 1990s, has become the best-known circus name worldwide, with as many as 10 different shows being performed in different cities around the world at any time.

In one form or another, circuses have been around since Roman times, when trained exotic animals wowed the crowds, while jugglers and acrobats amused guests before the next battle or race commenced. The real circus has been about those jugglers, acrobats and clowns, with animal acts added later. Circus traditionalists rightly say that Cirque du Soleil is not a real circus, however brilliant its staging. It’s a glittery show, but lacking in the essential down-to-earth art of circus — that special magic that used to connect those “wide-eyed kids and their nostalgic parents” to the very human performers in the ring.

As the big circuses close for lack of audience and funding, will there be a return to the intimacy of the traditional family circus or will the artificial magic of the digital world have destroyed one of our most enduring artistic traditions?

Let us hope that the seductive dream of running away to join the circus will not be lost forever.

P.S.: Disclaimer: As a former director of The Big Apple Circus, this gringo was thrilled to learn that as the result of a bankruptcy court-ordered auction, the circus would return this fall for the 2017-18 season, which will coincide with the 40th anniversary of the circus’s first performance in 1977. Lincoln Center and New York audiences will not have lost its gem — at least for the moment.

Endit…

The Battle Between Macro and Micro Marketers

Reading first-quarter reports from a variety of companies, not surprisingly, everything was focused on the “macro” numbers. The totals. Total sales and revenue, total costs, total number of employees, total ROI. That’s what the analysts and shareholders say they want to see. Don’t bother them with “micro” details: These just get in the way of the “big picture” and anyway, it is about time for lunch.

marketers battleReading first-quarter reports from a variety of companies, not surprisingly, everything was focused on the “macro” numbers. The totals. Total sales and revenue, total costs, total number of employees, total ROI. That’s what the analysts and shareholders say they want to see. Don’t bother them with “micro” details: These just get in the way of the “big picture” and anyway, it is about time for lunch.

There is no question that the big picture is important. But all macros are the sum of lots of little micros; and especially, the health of data-driven marketing businesses is determined by the optimization of each of these micro details. When they are summed together, they produce averages. And it is no secret that average is the most dangerous word in all of marketing — especially our data-driven kind.

Imagine 10 men sitting at a bar having a beer. The net worth of five of them is $250,000 and the net worth of the other five is $350,000. It is easy to calculate that $300,000 is the average net worth of the men in the bar. But now another thirsty fellow comes into the bar and orders a beer. His name is Bill Gates and his net worth is measured in billions. Now what’s the average net worth of the men in the bar?

It is perhaps a silly example, but if you are a marketing professional, you know that in working to define the income range of your target audience, the distorted figure you get when Mr. Gates’s net worth is averaged with those of the other men in the bar, it makes the “average” totally useless from a marketing point of view.

Like so many other things in today’s increasingly digital world, fortunately fewer and fewer marketing professionals are talking about average when they have a cornucopia of metrics that invite us to look at each specific person. The end of average is upon us, and we shall not be sorry to see it go.

And yet, even when we operate at a micro level, valuing each action or combination of actions, we can sometimes overlook the proverbial forest for the trees.

Especially if we have a big success, one of the easiest things in the world is to become complacent about it. That’s the direct opposite of “optimization.” Let’s call it lazy minimization.

Recently, a client, working to develop just how much marketing money he could afford to spend in each available medium and the optimum mix, challenged one of the golden rules I had laid down for the use of the Allowable Cost per Order (ACPO) model — never spend more than the ACPO.

The ACPO Methodology is explained in detail in the e-book “Profiting from the Magic of MarketingMetrics,” available from Target Marketing. For a free, short “How to Calculate the ACPO” presentation, just email “ACPO, Please” to pjrosenwald@gmail.com.

Turning away from his computer screen, he posed a very simple question, one that I should have asked myself years ago: “If you never spend more than the ACPO, are you optimizing your profit, or are you just playing it safe?”

While there is certainly nothing wrong with being “safe,” it is hardly the way to drive maximum growth.

When we ranged the different media cells from the lowest cost per order (CPO) to the highest and concentrated on the effect on the cumulative profit, we received a compelling message that our historic focus on not allowing the ACPO to be exceeded was detrimental to profit. I’m still kicking myself for not having asked and answered that question years ago.

Peter's ACPO chart

It’s all in the numbers. Had we eliminated all CPO cells higher than the ACPO of $265, we would have had 707 fewer sales and, therefore, less market share — a shortfall of 35 percent. But we would have spent $248,313 — a savings of $323,337, or 43 percent. That had always struck me as the best strategy.

But in asking the “optimum profit” question, my colleague had opened the door to a whole new way of seeing. Because, as you can easily see in the illustration, the optimum cumulative profit of $429,508 comes with the 13th cell at a CPO of $441, compared to the ACPO of $265. If optimum profit is really the name of the game, which it usually should be, then cutting off at the ACPO would be the wrong strategy.

We see this kind of aggressive thinking more and more and it is exciting. What we see less of, especially in SMBs, is a willingness to grasp the fact that however well things are going today, they could be improved if only management would abandon complacency with the “good” and focus on making it “better.” If only they would insist on getting inside the big macro numbers and look at the micros.

In today’s world, if the aggressive collection and use of the right micro data isn’t part of the core business case of an entrepreneurial company, something vital is missing.

Endit …

Where Have All the Mentors Gone?

Some recent and mildly frustrating interactions with young marketing colleagues started me wondering about the amazing mentors whose generosity and wisdom shaped my own career. What’s happened, I asked myself, to the time-honored practice of mentoring?

mentorsSome recent and mildly frustrating interactions with young marketing colleagues started me wondering about the amazing mentors whose generosity and wisdom shaped my own career. What’s happened, I asked myself, to the time-honored practice of mentoring?

What happened to the development of a partnership between someone eager to learn and someone older and with substantially more experience? Is this something like the typewriter or the telegram, an idea whose time has “went”? Has all the blindingly exciting new technology created an intellectual gulf between generations often too deep to cross?

Olden Times

While the practice of mentoring goes a long way back in history — “Mentor” was a character in Homer’s “Odyssey” and “guru” — “disciple” traditions are a part of nearly every religion and live on today. Mentoring for business became very fashionable in the mid-1990s. If it was something of a chic label for traditional apprenticeship at the higher levels of business and marketing management, there was no doubt that the mentoring of some exceptional talents served a major purpose in transforming the dusty old mail-order business of the ’50s and ’60s to the glamorous multi-channel direct and data-driven marketing so in-demand today.

Peter's blog post about mentors
Wikipedia says: William Blake’s watercolor of “Age Teaching Youth,” a Romantic representation of mentorship. Blake represented this type of relationship in many of his works, including the illustrations of his “Songs of Innocence.” The original object is currently held by Tate Britain.

Say the names, Dick Benson, Frank Johnson, Lester Wunderman, Bob Stone, Stan Rapp, Denny Hatch and David Ogilvy, to mention some of the superstars, and jaws drop. There you have an Olympian collection of mentors, each of whom nourished the talents of generations that followed.

I was exceptionally lucky to have had Benson guiding me on circulation planning and economics; Johnson instilling the creative discipline that makes it possible to stretch the rules without breaking them; and Lester Wunderman, as my brilliant lifetime guru, not just to extraordinary business breakthroughs, but more importantly to developing an understanding of human values and how they impacted our own lives and those of our customers.

Today’s Meme Culture — As In, ‘Me, Me’

As these and other great names have left the scene, who has come in to replace them? With all this positive history, why do many of today’s younger managers not only shy away from seeking mentors but actively discourage building mentor relationships?

The usual answer points to the gulf between today’s technologies and the mentor’s probable lack of technological knowledge and experience. It’s an often farcical battle between post- and pre-algorithm background and education. It also appears to be the result of this generation’s increasing dependence on Google and other technology to be their mentors, to provide them with “knowledge” without the pushback that might come from a human mentor: apps instead of raps.

Putting too much faith in the apps can have its problems. “Campaign,” the British marketing bible quotes Ebiquity, the leading media auditor’s chairman as saying: “It is a striking fact that today only about 40 percent of digital programmatic advertising investment reaches the consumer, with value being eroded by the multiple links between advertisers and publishers, fraud, lack of viewability and non-human traffic.”

Why, ask today’s digital whiz kids, should I bother with all of that historic crap when the right code will instantly give me the answers I need? It’s a valid argument built on a fragile foundation. It’s the questionable premise that whoever wrote that code was asking the right questions in the first place. How much do the code writers know about the sensitivities of the business and why don’t they prevent the 60 percent loss described above?

Unbox Yourselves, Marketers

In fact, this is probably the best inflection point for the need for a mentor. The computer model can churn out endless bases for building business and marketing strategies; but it will be very unlikely to think outside, instead of inside, the box.

When recently asked by a mentor whether a particular strategy would be worth investigating as a counterpoint to a current and only marginally successful initiative, the answer was promptly negative: It would mean rebuilding the model (extra work) and anyway, the needed data was largely unavailable (unlikely in a world of big data). Historic context and experience derived from dozens of similar situations was deemed irrelevant, even intrusive. The absence of mentors and the desire to seek them out prevailed. What a great waste?

The CEO of a highly successful service and product company shakes his head at this. “It’s not nearly so much the new ideas the mentors bring, but rather their invaluable help in avoiding what could be catastrophic mistakes.”

“Mentors don´t necessarily deal with issues of technology and business models,” said a publisher. “They ask questions and use their experience to find the optimum way to access the decision processes and the way to think about an issue. And they leave behind a better-educated and more effective executive.”

One is forced to ask; what do these digitally-driven young executives read? Beyond scanning Facebook and LinkedIn, what sources of knowledge and experience provide context for their ideas? And if mentors have outlived their historical usefulness, what can fill that vacuum?

Endit …