Archives for the month of: November, 2017

Uber is your new Klout score. Or is it?

November 21, 2017 //
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First, Klout failed. With that out of the way…

A recently published article by Mohamed A. El-Erian on Bloomberg, What a Middling Uber Rating Might Say About You, caught my attention. Even the snippet is intriguing:

It’s an opportunity to gather useful information for improving personal and professional interactions.

The article describes a woman, a friend of El-Erian, who is worried about her “low” Uber score of “4.5 out of a possible 5.” The story basically a real-life example of the Nosedive episode from Black Mirror.

Mathematically, to me at least, 4.5/5 = 90%, which in the U.S. gets you an academic A-; the second best letter score that you can earn: 90-93 = A-; 94-100 = A. The vast majority of people would really enjoy getting an A-.

El-Erian that proceeds to give advice to help rectify the situation:

If [your score is] below 4.7, ask yourself why, and not just by looking in the mirror. It may be less about how you believe you come across to others and more about how others actually perceive you. So, seek the frank assessment of trusted friends and acquaintances. You may well learn something that is useful for improving a broad range of personal and professional interactions.

In translation: there is something wrong with you, and you’d better find out what it is. And that’s just false.

The article makes mention that the his friend is an international traveler. Perceptions, ratings, and scoring thresholds vary greatly across the globe. Some cultures are additive, some subtractive. Meaning, in some cultures you start with 0 and work your way up; in other cultures you start with 5 (or 100), and work your way down.

The U.S. is a subtractive culture. You start will a full score and points are taken off. However, in additive cultures an average performance will give you an average score. Meaning, that if you do everything that’s expected of you, in a non-exceptional way, you’ll score right in the middle, not at the top. So, if the scale goes from 1-5, as it does with Uber, and you behaved perfectly normal, you’ll probably score a three in an additive culture. So, if you tip and tipping is normal, that’s a “3.”

In my EMBA program, during group projects, we had to score our teammates on a scale from 1-5. I live in a subtractive culture, but come from an additive culture, which I applied in my scoring. So, if your work was perfectly adequate you’d earn a 3 on my scale; if you work was very good you’d earn another point; and if you voluntarily assumed a leadership role in the project you could earn your final point. My average-performing teammates were not pleased…

And let me tell you, if you get 10% wrong on a test in an additive culture, you do NOT earn the equivalent of an A-. You’d barely get a pat on the back.

Back to the article. If a woman—this has to be pointed out, because few cultures treat women fairly—manages to attain and maintain a global Uber score of 4.5, spanning both subtractive and additive cultures, that is an excellent achievement. Yes, ideally gender would not matter. Ideally, and normally, women should also earn equal pay…

So, friend of Mohamed El-Erian, THERE IS NOTHING WRONG WITH YOU. You’re totally crushing it. In fact, you’re probably awesome! That’s the best human rating you can get.

Also, don’t let Silicon Valley ruin your sense of self-worth.

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Categories Culture, Random Thought

The SAAS Business Strategy Troika

November 20, 2017 //
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I haven’t written in a long time. Mostly because beyond technology there isn’t anything interesting going on in marketing. And in an arms race, if everyone has access to the same merchants and weaponry, there really can’t be any winners. So how do you win?

I’ve been spending most of my time on the strategy side. Remember, one of the the first axioms I’ve published is “If you are not marketing strategically, you are not marketing.”

Most people don’t grasp strategy; they confuse it with mission, goals, or tactics. Yes, you need all of these to have or execute a strategy, but also as I’ve written before, sameness is not a strategy. So, trying to out-do your competitors by being marginally better is not a strategy—it’s actually hopium.

But this piece isn’t about explaining what strategy is, but simply to give you one.

In combination, three recent articles foretell where services and digital products companies are heading (or need to be!):

  1. “Why Salesforce.com, Workday And ServiceNow Are Obsessing Over This New Cloud Metric”
  2. “Outcome-based Business Models for Enterprise Software”
  3. “New Decades, New Rules: Focus on the New Scarcity!”

Individually, there’s isn’t anything earth-shatteringly new here:

  1. It’s customer success, not satisfaction or loyalty.
  2. Having skin in the game and acting as a partner, rather than vendor, is good business.
  3. Data analytics, machine learning, and AI will power insights and value.

But when the three approaches—obsessing over customer success; implementing and outcomes-based business model; and leveraging AI and deep analytics—are combined and executed as corporate culture and go-to-market paradigms, then competitors will be completely unhinged.

1) Bob Evans’ point is that creating lifetime customer loyalty creates incredible value that drops to the bottom line. This is validated by the three “case studies”—Salesforce.com, Workday, and ServiceNow—which despite their already enormous size, continue to grow between 20-40% year over year.

2) Bill McBeath advocates for revising pricing, so that remuneration is based on measurable outcomes. Basically, you establish the current willingness to pay (the present cost of the problem), define the metrics you want as outcomes, and then mutually agree to the value of the solution to be implemented.

3) And the evergreen Geoffrey Moore predicts that CRM will overtake ERP “as the most prominent information system.” Why? Because, again and as above, customer intimacy creates loyalty, which creates revenues.

We all know that churn kills. Or, as Jason Lemkin says, “Customers don’t churn, they quit you.”

So, in an age of low switching costs, annual contract renewals, dwindling loyalty, and increasing automation, what’s your strategy for competing and winning?

If you want to achieve zero customer churn, you need to walk and map your value chain backward, and examine each and every piece to see how it connects to creating lifetime customer loyalty (or fix it).

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Categories Marketing, Strategy