Strategy and Tactics – Page 155 – IS Survivor Publishing

Customer Elimination Management (first appeared in InfoWorld)

And now, news from the trailing edge of customer service, which my father, the great guru of direct marketing, has dubbed CEM, for “Customer Elimination Management.” I won’t mention the names of the offenders — that would be crass, and besides, I doubt they’re the only companies that pull stunts like this — but there’s a chance you’ll be able to figure it out their identities from context. Just don’t ask me to confirm or deny your inference.

Item 1: A few months ago I received a telemarketing call promoting a new program from my current long-distance provider that provided far more inexpensive long-distance rates than I’d been paying, so I signed up. Something went wrong, though, and my bills continued to show the original, 400% higher fee.

When I called, the customer service associate couldn’t do anything because there was no record of the transaction. Her supervisor gave me the identical answer.

“Somewhere in your company, there’s somebody who cares that you’re about to lose my long distance business,” I said. “I’d like to talk to that person.” The supervisor promised her manager would call me within 24 hours.

The silence since then has been so profound you could hear a pin drop. I paid my bill and changed to a different long-distance provider.

Item 2: The credit card I’ve preferred for over ten years was unique, and admirable, in figuring that if I paid $500 when $25 was due, I’d prepaid the following month. So I was surprised to Discover a late fee on my bill exceeding the amount due. The customer service associate explained that the policy had changed. Oh.

Then I asked for help removing my ex-wife’s name from the account, something I’d been trying to accomplish for quite awhile. The response: It can’t be done. I’d have to close this account altogether and apply for a new one. Since no offer to help with this process was forthcoming I asked to close my account. At last! I got prompt, efficient help — losing my business forever took less than three seconds.

The theory of CRM is that customer acquisition is expensive, so companies profit by spending far less to retain the ones they have. It’s a good theory and it works. CRM software is intended to help implement this strategy consistently.

If your company, like the anonymous offenders described here, practices CEM instead, here’s some advice: Don’t bother installing CRM software. It won’t help.

Mirror chess (first appeared in InfoWorld)

When I was a kid I played chess, or at least a game that used the same board, pieces and rules that chess players use. I wasn’t all that good at it: I lacked the aptitude, I lacked the necessary patience, and mostly I was too lazy to study the game.

I substituted ingenuity for study of the game. Pitted against a superior antagonist, I copied his moves, figuring I’d stay even until I spotted an opportunity. Clever, don’t you think? I figured that since only tens of thousands of people had played the game over the centuries since its invention, the odds were good nobody had ever thought of this strategy before.

My opponent thought it was clever, too. “Mirror chess, hmmm?” he asked. Then he moved. “Checkmate,” he commented.

Mirror chess can’t win, which is why most companies that copy the strategies of more successful competitors don’t succeed. Right now you see this with technology companies entering the services business. IBM makes more selling services than technology, after all, so it must be a good strategy, mustn’t it?

Well, no. It’s a very bad strategy, precisely because it’s a good strategy for IBM. IBM is already there. So are EDS, CSC, Accenture, my old compadres at Perot Systems, and a zillion other companies as well. The services marketplace is overflowing with entrenched competitors. It’s mirror chess, and a losing strategy.

Does this mean a company should never copy a competitor’s moves? Not at all. There are at least two very good reasons to do exactly that. One is defensive: Sometimes the game is poker, and a competitor raises the ante — perhaps by improving service, or reducing time-to-market, or finding a way to dramatically cut costs. You can’t win by copying the move, but you might lose completely by failing to do so.

The other reason is offensive. Early in the life of a new marketplace a competitor proves a concept, then gets fat, happy and complacent. Whether it’s Microsoft taking over WordPerfect’s and Lotus 1-2-3’s turf, intranets taking over from Lotus Notes (see a trend?) or AOL taking over from CompuServe, moving into a good marketplace dominated by a weak competitor is a great strategy.

In chess the opponents start off with equal strength. In business that’s almost never the case, and level playing fields are for those who lack the wit to find one tilted in their favor.