Who is your benchmark? Does that determine your success?

I remember being trained on the Baldrige Model quite some years back and quite liking the concept that a metric did not mean anything unless it had a trend, a comparative, and a benchmark or goal. the statistic (e.g. 15% gross margin) could mean anything, or its opposite, depending on the trend, comparisons and the goals. 

That brings me to an interesting discussion on choosing your benchmarks. Since that has such a huge role in defining your story, and since one has such a huge flex on deciding benchmarks, wouldn't that be the Achilles' Heel of determining your future actions, and your success? Example - if my headcount is 100, and a competitor is at 200 at the same business value, I could be at double employee-productivity. But then maybe another country in my company is operating at twice that productivity already. Maybe I can look at a benchmark in a different but similar industry and find another story there. 

Truth be told, a company is a group of people. People try to maximize utility (in theory, don't get me all behavioral here), and they will pick benchmarks that make them look good. I have rarely seen benchmarks being questioned, leave alone audited, in a company. Herein lies the loophole. 

But hang on, I am not even saying this is all bad intent - it could just be lack of thought, or information, or knowledge, or just legacy, that makes us pick the wrong benchmarks, set the wrong targets and get the wrong feeling about our market success. 

I like asking people for alternate benchmarks - give me one that makes you look good, one that makes you look ok / bad and one that makes you look pathetic. Then pick two - yes, two. One for the external world when you want to justify your performance and ask for your raise (make sure this one is logical and defensible though), and one that you use to push yourself and your team. 

What are your thoughts?

Battles in life are fought from where you stand

Very often, when one conducts strategy brainstorming sessions, two beautiful but often futile phrases, typically starting with 'if only' and 'only if' make their way into the discussion. If only we hadn't exited that one segment three years back, only if there was more money coming from the headquarters, and so on.

There is some beauty in thinking out-of-the-box, and in thinking about possibilities - my only issue with these discussions is that they take away time from the more here-and-now talks that are probably more useful, and maybe critical to have.  Competition has a model of eCommerce where they carry inventory, we don't. There's little point thinking only if we had the inventory model too. It's a useful discussion if you are thinking ten years ahead - if you're thinking just the next year, maybe there is other stuff to fix. Battles in life, not only organizational, but also personal, are fought from where you stand.

If I was standing on top of a hill in this battle, I'd roll a boulder. But if I'm in the valley, that's where I am and that's where I'll have to fight from. If I roll a boulder, it'll roll back on to me.

Maybe I should not be searching for boulders to roll. I should be thinking about avoiding stones that I'll get thrown on me. That's my today. When it's a good time, I should think about how to get on top of the hill. That's tomorrow. And if and when I do figure out a way to the top and get there, that's when I should look for a boulder to push. That's day-after.

Can Data go the Public Goods way?

We know Public Goods - we read about them in introductory economics. There are fishermen living around a lake that's become prone to overfishing, and now fishing it banned there. If one fisherman still goes out and fishes, it is his gain and everyone else's loss. If he does not go fishing, it's his loss and potentially, everyone else's gain. No prizes for guessing what happens. 

Now data, come to think of it, is getting easier to get. A whole lot of our lives right from our correspondence to reading to shopping lists to shopping to money have all become data. A whole lot of data sits in servers and the cloud, and at some permissible level of aggregation, all data can be and is sold. There is data about you that I have access to that you don't know I have access to - and this is still legal. Beyond what's legal, there's obviously a lot more that can happen. People can use this data, for good purposes (e.g. check, you have high heart-risk in your family, heart attacks peak in the winters, most happening within one hour of getting up, and you have run out of your medication...and so on) and otherwise (don't want to give examples here, but you get the drift, right from invasion of privacy to selling you crazy stuff to outright blackmail). So what will data operators do?

A lot of the data is just out there. There could be a traffic camera capturing your movements, your cell-phone operator knows where you are, social networks know what you like, search engines know what you search for, eCommerce guys know what you buy, and so on. The list is endless and includes your stock-broking-engine, your bank, your tax-software and everything app you have on your phone and every website you sign into. To make matters worse, all these guys are bombarding you with cookies that now know information across platforms and websites and try to make sense of it. 

There is the obvious risk of malpractice, data-leakage and hacking. And there are simpler risks like just the headache of irrelevant offers made to you, and others knowing what you are - which could be uncomfortable sometimes. There are Target-like examples of knowing too much. There could be violation of data-walls, the issue ot shared-devices and the joke about the wife who complains that the only thing my husband cleans at home is his browsing history! Or the cartoon about the wife who knows the surprise her husband has for her because the common PC is bombarded with retargeting ads for that gift. Mind you, this is before the internet of things hits us in our face.

Mature businesses don't want to use any data the consumer doesn't realize he's shared. But there are all kinds of companies out there at all stages of desperation. There are lax laws on this, one could always argue out a certain level of anonymity that is still insightful - in other words actionable and useful to a company. Today the cookie people get paid by the platform that gives them data as well as the platform that uses it. 

Now what does your crystal ball say? Can it go bad to the point that the Golden Goose of data is killed by some operators? Can consumers get miffed to the point that they (try to, it's tough) share data altogether, or at least lobby to get legislation around the use of data unless the operator has an explicit, simply-worded opt-in with a forewarning?    

What do you think?

Loyalty - so much more than RFM

What does RFM mean? Someone's shopped recently - does it mean the person is more loyal? Frequency is again a function of category - one should look at share-of-occasion and not frequency unless one is working within a closely defined category - which is rare. Monetary value similarly means less. These three factors perhaps are telling you which customers are contributing disproportionately to your company's value - but but not as much about how loyal they are and why. 

 

Talking of loyalty, the first distinction to be made is obviously between purchased vs. natural loyalty. Purchased loyalty - buying occasions induced by throwing money at the customer is more in the league of buying turnover and hence not really part of a loyalty discussion. The use of insights and analytics to this field will at best yield a better efficiency for interventions such as subsidy and coupons, but loyalty by definition is not this, right? Now that brings us to the rudimentary but complex topic of defining loyalty and more importantly, remembering the definition as we go about undertaking various activities under the garb of loyalty. For this discussion, therefore, paid loyalty is out of syllabus. 

The second most important distinction to be made is between attitudinal vs. behavioral loyalties. Both are important and in syllabus, but it is still important to put the right label when we speak - because both are fairly different animals. While behavioral is observable, measurable and clear, it cannot easily answer 'why' questions. One could have high exhibited loyalty just due to the lack of  alternatives, or better alternatives. It is a practical kind of loyalty to measure though, and a focus here ensures one is not wasting time running faster than the tiger. At the same time, it is important to remember that buyers can be loyal and potentially open to switching at the same time - not single but ready to mingle nonetheless. 

The attitudinal kind of loyalty is the holy grail of the 'why'. 

Storks mate for life. Wild dogs, ants and bees exhibit loyalty to the pack. Dogs may not show loyalty to their mates, but they're loyal to their human masters. Cats are said to be loyal to the house and the lioness to the 'position' of the most powerful lion. The logic of loyalty is certainly complex and non-trivial - and we haven't even started talking about humans.

We haven't spoken about how some people may be more 'predisposed' to being and staying loyal. This is something you could possibly measure - such people have clear favorites that don't change that often. in most cases - music, food, colors and so on. On the other extreme are 'variety seeking' people - who like to try different things and not get tied into a pattern. The first person, if ordering five dishes in a restaurant, will order four familiar ones if not five, while the second person will order only one familiar dish if at all, and others he hasn't even heard of - the more exotic the better. Of-course the perplexing question here would be are the predisposed people already taken? Or they still have 'open' slots for newer brands to latch on?

A close topic is the cultural context to relationships - in India, disloyalties to a girlfriend are commonly / socially forgiven, but not to a wife. Disloyalty to an employer is again, forgiven - but in Japan that too, is a matter of loyalty. Within various age-groups in India, the elder generation is probably still loyal to a brands like Bata and Tata, the younger prides itself on discovering new, cool brands every day.  

We haven't spoken about some categories being more prone to loyalty - more 'emotional' and less 'commodity'. Now who's loyal to a brand of memory-cards? But we are, to mobile phone brands, right? What about inherently infrequent purchases like double-beds? How many will you buy even if you're loyal to a retailer?

So clearly, we aren't having the debates we should be having - we're merely talking about which customers already bought more from us. We're talking about cross and up-selling, driving repeat and many things I completely respect - but loyalty is the wrong label for these conversations. 

After we separate the discussion around transaction incentives (don't you hate the term 'paid-loyalty?'), after we speak of customers predisposed to loyalty towards categories they care about, after we put the filter of financial and emotional viability on it - in other words creating loyalty drives meaning for the customer and the company, after we separate behaviors from underlying attitudes, then and only then would we begin to understand this noble emotion.  

ps: thoughts welcome - I think it's happening to a lot of other big words (e.g. Trust - familiar?) too. More on that later.