Understanding and Exploring Customer Engagement presented at the: Adobe Worldwide Sales & Marketing Conference Rolf Skyberg Disruptive Innovator for eBay, Inc. http://rolfsky.com [email_address] Friday, May 29, 2009

my job title at eBay is both fun, and confusing

the role of “Disruptive Innovator”

is part Product Manager, part evangelist,

sometimes developer,

and always interpreter .

my main job is to inspire and excite individuals both inside and outside eBay

by any means necessary.

a little history about myself:

my University major was business,

but I also minored in theatre

and later pursued graduate studies in System Science

“ System Science” is the study of complex interactions over time,

including topics like: computer networks, economics, traffic flow and human actions.

system science is focused on exploring patterns within complex systems,

abstracting those patterns,

and reapplying those patterns to different areas.

so, given my background,

I won’t regale you with stories

of “victories in the trenches”

but I can perhaps give you new ways of looking at the world.

there are no silver bullets in this presentation,

instead,

we’ll examine some patterns that you can leverage

in combination with your own: experience, skills, and abilities.

today I will be talking about:

cola,

corporations,

bears,

peanuts,

juristic persons,

customers,

the Civil War,

and maybe business.

(actually, the bears are just a joke)

this is in fact, a bear-free presentation.

and because there are no bears,

let’s start with John Pemberton .

Section 1: A History Lesson

the year is 1886 in Atlanta, GA

the American Civil War is 20 years past,

and America is gripped by the concept of “ patent medicines”.

John Pemberton is a veteran of the Civil War working as a druggist

in his laboratory, he concocts his own patent medicine

including leaves of the coca plant and flavoring from the kola nut,

to perhaps alleviate aches and pains of Confederate soldiers (or his own morphine addiction)

the curative effects are questionable,

but it is certainly tasty .

the formula becomes the foundation

for perhaps the world’s most highly-recognized brand:

by World War II, Coca-Cola had 60% of the US cola market,

and had become an iconic American brand,

but by 1983, marketshare had waned

to under 24 %.

market research said that consumers liked “ sweeter” drinks

and sensing pressure from market-rival Pepsi-Cola

Coca-Cola decided to change their formulation.

what followed in 1985

you may know as:

for those of you not familiar with “ New Coke”:

Coca-Cola changed the formulation of their cola,

told everybody that they would love it,

a lot of people didn’t even notice,

but some very vocal people

had a meltdown .

particularly in the American South

where “ a coke ” has come to mean any cola.

lobbied intensely,

and boycotted in many regions,

Coca-Cola caved

and reinstated the old formula

within 3 months.

the story of the failure

is an interesting one

because it’s not so much a failure of product ,

as it is a failure of relationship .

customer satisfaction and taste tests of New Coke

showed that a majority actually preferred the new taste

yet users who felt wronged went so far as to create:

“ Old Cola Drinkers of America ”

psychologists hired to monitor messages left on the company hotline

described some calls as sounding like the caller was discussing

the “death of a family member”

soda bottling companies complained that they felt difficulty promoting

“ The Real Thing”

when New Coke was, in fact, not the Real Thing

Coca-cola didn’t just change the flavor of Coke,

they insisted that the “new” Coke was better,

and made the decision to change without informing, or including their customers .

to many people,

New Coke was a vast betrayal,

as if your mother had been replaced

in all your childhood photos

with a “better” mother.

the reaction to new Coke

shows in a very real way

how an “impersonal” decision

was interpreted very personally

with disastrous results.

this is perhaps the opposite of “ customer engagement”.

so what is “ customer engagement”, really?

the Wikipedia article spans 3500+ words,

but 9% of that article is spent saying essentially:

“ a lot of people define Customer Engagement different ways ”

maybe the first sentence of the article can help us?

“ Customer Engagement ( CE ) refers to the engagement of customers with one another, a company, or a brand.”

this definition is so broad, that it has limited use.

“ engagement” is defined in a multitude of ways, both online and offline,

so how exactly can we focus on Customer Engagement

without focusing on everything ?

perhaps we can glean some meaning from various CE materials:

http://adobe.com/engagement

there’s some very excellent research articles here that might help us:

March 2003: “ if you don’t make an emotional connection with customers, then satisfaction is worthless ”

which probably informed this article, one year later:

September, 2004 “ marketers realize that emotions are important. But they’re not quite sure why – or what to do about it. ”

in three years, the conclusion is:

January, 2007 “ Customer Retention Is A Process Not An Event ”

perhaps the most telling, is the oldest article listed,

back to August, 2001 “ The Engagement Imperative”

“ What does this all imply? … it’s easier to identify the problem than it is to solve it … significant organizational commitment and investment are warranted … if companies want to address the opportunity and the risk represented by customer dis -engagement.”

let’s review the learnings so far:

1) customer engagement, good.

2) customer dis engagement, bad .

3) emotional connection, important.

4) the whole problem, difficult .

well, now what?

this problem hasn’t yet yielded to traditional thinking.

so, let’s look at another case study

of America’s most LUV’ed airline:

founded in 1971,

Southwest Airlines posted its 34 th year of consecutive profits in 2007

during a time when nearly all other domestic airlines had filed for bankruptcy.

there are a number of factors to their success

but quite simply, they do great business with a smile .

in addition to revolutionary business choices

(peanuts instead of full meals, no hub-and-spoke flying, focus on turnarounds, single-model fleets, relaxed crew attire)

their founder,

Herb Kelleher

has been instrumental defining corporate culture and direction.

in a Forbes interview in 2001, Herb laid out Southwest’s secret to success:

"I tell my employees that we're in the service business, and it's incidental that we fly airplanes "

the interesting thing about their revolutionary business practices

is that none function in a vacuum

nor are they goals unto themselves

for example, take two practices: focus on fast turnarounds and relaxed crew attire.

aside from the documented health benefits of loose-fitting clothing,

the casual-tailored uniform

sets a tone for the interaction between customer and employee:

official without being officious.

it allows Southwest cabin crew to make statements like,

“ Ok folks, the faster we can get butts in seats, the faster we can pull away from the gate...”

imagine the same statement coming from a stewardess in a dark-blue sharply-pressed suit.

it doesn’t sit as well

as if seating passengers is a “necessary evil”.

so while relaxed attire has nothing to do with fast turnarounds,

it has everything to do with customer engagement.

with consistent and clear direction from the top

each Southwest employee is enabled and encouraged to live the company values

exercising their best judgment on a daily basis

knowing that whatever the “right” decision is,

that is the decision that is best for the business.

this focus on service and consistency

has earned them a reputation for reliability.

if Southwest was a person,

they would be the friend helping you move your couch on the weekend.

it would be fair to say

that Southwest has great Customer Engagement

but how did they get there?

Section 2: Investigating the Problem

maybe we need to start at square one:

let’s break the problem down

into pieces we can understand.

we have customers,

which are people, with money

that’s pretty easy to understand.

of course, because they are people

they also have things like: time energy emotion connection

if we focus singularly on “ getting their money”

the most effective business model

would be to steal their money in dark alleys.

but obviously that wouldn’t work,

because it would damage the connection between the customer and the company

so obviously the “connection” is important too.

this connection is the relationship built between

the customer,

and your employees,

the people who make up your company

each and every action made by an employee of your company

ultimately affects that relationship,

from the very top, to the very bottom.

to understand why,

let’s look at what a corporation actually is.

the Latin root of the word corporation is “ corp- ”

meaning “body”.

the word “corporation” actually means “ the embodiment”,

or creating an artificial “person” which acts as that business.

in the eyes of the law, this new body is a juristic person

being a juristic person is just a fancy way of saying:

the corporation has many of the rights and responsibilities of an actual human,

namely, it can enter contracts, sue and be sued, and own property.

this new “person” is the conglomeration of all individuals’ actions within that group.

so if corporations are collections of people,

and customers are collections of people,

how do the two interact?

the first corporations can be traced to ancient India and the Roman Empire

but the modern version has been around

perhaps only a few hundred years.

this number is important,

when you compare it to 200,000 years

which is approximately how long humans have been interacting with other humans on this planet.

even if we say that corporations have been around for 2,000 years,

simple math will show that corporations have been around for approximately only 1 % of human history

in other words, they’re pretty new .

in an evolutionary sense,

we’ve just barely had time to figure out what they are all about,

and we mentally wrestle with the fact that

an arbitrary group can create a new “person” by incorporating it.

ill-equipped and untrained about how to interact with a corporation,

we seek familiar ground,

something we can wrap our minds around.

with no better model than our own experience,

corporations,

highly complex and faceted organizations,

are again reduced to “a person”, in their own right

this “person” is imparted with all the same rights and responsibilities

of any regular person in their lives.

so, while your company may employ:

thousands of individuals,

a multitude of departments,

and have a plethora of projects,

the average customer lumps it all together under one name,

one corporate persona.

these associations are easy,

because we are well-schooled in how to interact with individuals

and these skills carry over to interacting with vast nameless entities.

but with the ease, also comes a danger:

every employee now represents the entire company.

to explore this, let’s examine what happens when something goes wrong:

in our example, we will use a mega-corporation,

“ TechCorp”

now, the salesmen and marketers of TechCorp ,

acting on the best information available to them,

launch a campaign explaining that next Spring will bring

TechCorp’s WidgetUnit’08

(and it will be the best thing, evar)

unfortunately, TechCorp’s design and implementation teams

estimate incorrectly,

and TechCorp can’t release WidgetUnit’08 until

Winter, ’09.

this happens one time,

no big deal, mistakes happen,

a wary forgiveness is in order.

this happens ten times,

TechCorp ’s sales and marketing are taken to be clueless,

or liars ,

or both,

and nobody pays attention to them anymore.

but bigger than that (!)

ALL of TechCorp is lumped together,

because they are, after all, the people who employ the liars.

if this idea seems odd,

think of how you might view TechCorp differently,

if it was one guy,

mowing your lawn.

more than likely,

it would only take two missed appointments before you wrote them off

as a total flake.

the really unfortunate part

is that the sales and marketing folks at TechCorp ,

aren’t liars!

but they were put in a position

where they promised something that was ultimately not delivered.

in this example, customer engagement has been compromised

because credibility has been lost,

and it’s no different

than if any one person promised something and didn’t deliver.

the most profound

(and most difficult)

implication of this model,

is that the right hand must know what the left hand is doing,

and also corroborate with both feet, the torso, and the mouth.

imagine if you will,

a skilled craftsperson, carving intricate woodwork with razor-sharp tools.

while normally you would expect their heads to be lowered in concentration

they are looking you dead in the eye, a wild toothy grin on their face,

completely ignoring what’s going on in their lap.

any rational person would note these two disjunct features

and likely conclude that this person is a raving lunatic .

conclusions like these

are exactly what customers think

when things don’t “match”.

I normally don’t do this, but here’s a video showing my point:

http://www.youtube.com/v/heSudg-tfIk

this type of internal communication

is a task of immense dimension

literally requiring the participation of an entire business.

if we want to continue the biological analogy,

consider the elegant and complex function of our central nervous sytem.

an entire system evolved because evolution figured out:

“ hey, we’re not going to get this done unless we’re working together…”

Section 3: Applying the Model

ok, so you’re slides into the deck

and just to make sure you’re paying attention

it’s audience participation time.

it’s around about Christmas time, say, December 12th

and your young one is begging you

for a Nintendo Wii.

unwilling to disappoint,

yet still rational enough to not risk life and limb

and go to a regular store,

what do you say to yourself?

“ Well, I can always get it __ ____ !”

if you said,

“ Well, I can always get it on eBay !”

(you get brownie points)

you have also unconsciously made a statement about who/what eBay is.

to explain this,

let’s use our model

to examine eBay.

eBay’s business model is to connect buyers to sellers

and looks roughly like this:

eBay buyers sellers

but of course, that’s not entirely accurate

one thing stands out immediately:

eBay isn’t one person

it’s actually more like this:

eBay buyers sellers employees

but it’s still not quite right,

because the “connecting sellers” half is largely invisible to the buyers

so the graph looks more like this:

eBay + buyers sellers employees

we can further condense to the buyer’s real view:

buyers

while we are “merely brokers” for sellers,

our customers view each seller as an employee of eBay,

and their actions are part of our brand image.

this is all fine and good, but how are we using this knowledge?

using this type of thinking,

we are now focusing more time and energy

on things that were traditionally “ out of our control”,

to improve the quality of business on our site.

for example:

when a buyer has a bad experience

with an individual seller through eBay

that expensive shipping or fake handbag

is eBay’s responsibility

because we operate the marketplace

and ultimately we need to cultivate a marketplace where people feel safe and happy.

yet this isn’t an easy solution,

it’s a very difficult balancing act

it would be easy,

to take our new idea too far, too fast.

imagining the extreme:

switching from an open “hands-off” marketplace

to a closed, monitored, and regulated marketplace

would alienate the right side of our equation, our sellers.

the more connected you grow to your customers,

the more critical it becomes to involve them in your decisions.

Section 4: Going Back To Your Desk

“ so if this model is really true, what can I do with it? ”

probably the goal of any customer engagement is to build

“ a friendly working connection”

so how do we build friends in the real world?

let’s refer to “CoolNurse.com”

and “Building Healthy Friendships” http://www.coolnurse.com/friendships.htm

this list has “50 tips” for nuturing healthy friendships

and with just a little imagination, all of them start to make sense

here’s a few highlights:

#3. Check with them on a regular basis; find out how they are doing.

#9. Send a card of friendship completely out of the blue.

#23. Heap praise on your friends, it’s a way to help them grow.

#5. Be open and honest.

#18. Trust is integral to a great friendship.

#28. Make promises and keep them.

#44. Develop skills for managing conflicts that might arise.

#1. Keep your friends in mind and ask them how you can help them.

while it would be easy to write much of this off

as “ touchy-feely stuff”

realize that achieving this relationship is a competitive advantage

but all proven competitive advantages are transitory.

consider the electrification of factories in the early 1900’s,

originally while this provided a competitive advantage

eventually it became a requisite for doing business.

it would now be laughable to setup shop without power.

similarly, when the Web first appeared,

online stores were an opportunity to “ get ahead”

but now they are virtually required.

as technology continues to become more accessible,

offering more and more flexibility, speed, leverage, and output

a lasting edge will be something machines can’t replicate,

the human bond.

Section 5: What Can I Do?

I can’t claim to have told you anything you didn’t already know.

but I hope that I’ve related new frames of reference for examining situations.

the easiest directive (and perhaps least useful)

is “ go build good relationships!”

but I assume you’re already working on this,

so how about something different?

if this is the best the system can do,

then start changing the system.

your colleagues

likely know what you know,

but this new frame might be the lever they were looking for.

so share and discuss

even if they don’t buy in, at least you got them thinking.

also, recognize the “tension” you feel

when you have a decision that makes you pause.

any time you feel the need to “rationalize” a decision,

realize that you are creating an exception

that will be viewed as an anomaly from the outside.

so if you’re put in a position

where you are forced into a decision,

track back those causal pressures

and let somebody know.

let people above you know,

let people below you know,

explain to them that each exception

is a decision that must be “cared for”

from this point on,

and caring for this exception will require time, effort, and dollars.

it would be cheaper to remedy the cause than create the exception.

of course, all this takes courage

and a few allies never hurt your cause

so look around, and note who’s nodding,

these are your compatriots

in changing the world.

creating honest and genuine connections with your customers

not only makes sense,

it’s good for business.

I believe:

in “life, liberty and the pursuit of happiness…”

and together,

we can bring that spirit to everyone.

The End.

Rolf Skyberg [email_address] http://rolfskyberg.wordpress.com

Thank you to: Lawrence Lessig, for the presentation style Dick Hardt, for the inspiration Inkscape, for a wonderful vector graphics tool and you, (yes you), for coming

Slide #

Rolf Skyberg [email_address] http://rolfsky.com