Recently I was talking with Paul Greenberg and he presented me with a particularly elegant concept that he called the “Experience Portfolio.”  He was talking about the collection of factors that influence the overall customer reaction to the transaction they’re consumating with a vendor.  The Experience Portfolio consists of products, services, experiences and tools.  He talks about the balance between these components in a recent blog post and asks some interesting questions:

How do you think about this when you are developing your Social CRM strategy?

Do you break out the likely effect of the products, services, experiences and tools on the overall experience?

Do you weigh the likely impact of each “functional area” and look at how the ordinary is going to affect the overall experience.

Paul didn’t use the “Portfolio” concept in the post, which was a shame, because I found it to be very evocative of the kinds of tradeoffs that have to be made to optimize a strategy for balancing the components.   Investment portfolios are designed to play off different investments to maximize the returns while minimizing the risks.  Each investment is chosen not only for its strengths, but for its ability to offset the weaknesses of some of the other investments.  Investments must be chosen wisely, because there is not infinite capital to allocate among the various choices.  Putting too much capital in one place may work well for a time but ultimately fail spectacularly.  This concept of the need to balance and allocate scarce resources to produce an optimal outcome comes up over and over again in business, so it should be no surprise that we have to deal with it in terms of our CRM strategies, Social or otherwise.

Let’s look again at the components of our Experience Portfolio.  Think of each one as a place a business can invest in to maximize the likelihood of Customer Satisfaction (or whatever you’re trying to maximize for your customers):

Products:   What you are literally selling.  Zappo’s sells shoes, the hotels in Paul’s blog post sell rooms, and McDonald’s sells hamburgers.  Service companies sell Services, BTW, and we should not confuse their “Service Product” with the ancillary Services in our second category.

Services:  Something else that comes along in addition to the Product that the vendor made happen using People.  Zappo’s is legendary for the Service that comes with their Shoe Products.  The Ritz Carlton adds Service to their Room Product.  A public accounting firm may make a practice of hiring accountants that are especially personable or perhaps more likely to resonate with a particular demographic as an illustration of Services on top of a “Service Product”.

Experiences:   Experiences are the most intangible.   Paul’s examples involve Hotels that have gone out of their way to convey a hip atmosphere.  Clearly Apple conveys an Experience, and not just Products with Services.  So does Starbucks.  Many companies offer little or no Experience.  Think of the most generic possible retail products and outlets.

Tools:  Software and other tools used to help optimize, shape, or deliver the other three components.

To get back to Paul’s three questions, let me briefly answer and then expand.

1.  You have to think about the Experience Portfolio when defining your Social CRM strategy, or any other CRM strategy for that matter.  It has to inform how you think about your product, your brand, who you are selling to, and how you go about servicing, marketing, and selling.

2.  You should be making conscious strategy decisions about each one of the four Experience Portfolio components.  Otherwise you won’t have optimized you portfolio except by accident.

3.  You have to weigh the impact of each component in making your decisions, and you should understand how to measure that impact in practice as well in or to determine whether the strategies and weightings you’ve chosen are working.

How should we go about using the Experience Portfolio to help inform our decisions?   A full explanation would make for a nice Business Book and this is just a blog post, so let me borrow from Paul’s Hotel examples and from my earlier musings about Michael Porter’s Competitive Strategies.   Let’s use 3 hotels as our examples.   Each hotel has decided to optimize for one of Porter’s 3 successful competitive strategies.   One, Motel 6, will compete on price.  Another, the Ritz Carlton, will position itself as the very best hotel “product” that is available anywhere.  The last, and I think I’ll use Paul’s Allegro hotel since he liked it.  The Allegro is using the Porter strategy of positioning for a particular niche or demographic, in this case it is people who have an acute aesthetic sense and desire to be hip.

Now let’s go through the experience portfolio:

Product: 

–  Motel 6 has to deliver the absolute cheapest product bar none.  It is entirely focused on good enough not to be a total turn off, but no better.  Spending any more means not being able to pass on the savings to the customer.

–  The Ritz Carlton needs the best possible rooms.  It can’t afford to cut corners on the rooms at all.  The bed, the bathroom, the storage, comfortable seating, and every other aspect of the “Room Product” have to be the best that there is.

–  The Allegro needs to offer a room that is good enough for their niche audience, but no better.  Moreover, if there are aspects of the room that are relevant to that niche, they should be dramatically better even than the Ritz Carlton.  In this case, you get the très chic decor, but the room itself is pretty small.  Paul’s other experience, at the Hudson, made the room so small that they went below “good enough for the niche audience” and created a problem.  They didn’t balance their portfolio properly and underspent on the Product.

Services:

–  Motel 6 will be good enough on Services as well.  The rooms have to be clean, and check-in and check-out needs to be quick and easy.  That’s it.  No concierge.  The service help concentrates on being invisible.

–  The Ritz views Service as an essential part of the product, which is often the case if you’re going to deliver the Best of the Best.  As such, this is a huge focus for them.  They go to elaborate lengths.  Even the people who are just there to clean the rooms are selected for the friendly outgoing personalities.  Everyone you see greets you.  The hotel will go out of its way to do anything you ask, and they’ll spend time thinking of new things to offer before you ask.

–  The Allegro should be focusing on the service levels their niche expects, but without standing out.  They should be thinking of Services that may be uniquely attractive to their demographic.  Since all the decor is very contemporary, let’s assume for example they might benefit from the very best in-room Internet capabilities.  Perhaps you should have Social Media access to their staff rather than having to call.  Perhaps your reservation gets you a personalized web page “concierge” that let’s you get access to all the kinds of things this niche would care about.

Experiences:

–  Motel 6:  Free coffee and danish is a big deal if you’re at a really nice cheap hotel.  Maybe a pool.

–  Ritz Carlton:  From the Old Wealth ambience to the High Tea (if you like tea, you’ll like the Ritz’s) to the locations chosen for Ritz Carlton hotels, you will not be disappointed.

–  The Allegro:  Sounded like they had their experience dialed in perfectly to appeal to their niche.

Tools:

–  Motel 6:  The purpose of any Tool is to let them deliver rooms cheaper.  Self-service on the web would be one example.

–  Ritz Carlton:  Has to be very careful that Tools are not percieved as cheapening the experience.  The Ritz would use tools behind the scenes to ensure the quality of the experience and to enable their people to deliver a better experience than they could without tools.  They would be unlikely to ever force a customer to use these Tools unless customers specifically wanted to do so, but for those customers that want access they would ensure the experience with the Tools was the best possible. 

–  The Allegro:  Good enough not to disappoint their niche, but perhaps quite innovative where that would appeal to the niche.  With a contemporary motif, there is a lot of opportunity to do interesting differentiation with the tools.

Conclusion

This approach to allocating scarce resources to the Experience Portfolio is pretty compatible with the comments I saw on Paul’s post:

Natalie got into an ugly situation with the Westin because someone there pulled a clever marketing trick to appeal to demographics that wanted a bike with their room, but failed to follow through on the Experience Portfolio.  The bike was a tactic, not a conscious strategy, and wound up making things worse for them.  She was absolutely right to be annoyed about it.

I take Mitch Leiberman’s post to be that at some point, you may have maxed out the Experience Portfolio along one dimension without creating a differentiated offering.   When that happens, try reducing the investment on one of the dimensions and refocusing it elsewhere to create a more optimal overall experience.  Classified ads are the same every you look.  Giving more font control or some such wasn’t really going to be worth the effort, so Craigslist broke the mold by investing in other portfolio categories than the “Product” specifically.

Wim does an excellent job of taking the tactical (just seek “engagement” for engagement’s sake) and casting it into a strategic frame:  Either gain insight through feedback or create a more personalized experience using engagement.  The nature of the personalization should be informed by your overall strategy for differentiating for your customers.

Esteban recognizes that customers make choices that are influenced by context, intent, expectations, and the subsconscious.   Have you taken care with your Experience Portfolio investments to properly align those inputs (context, intent, etc.) so that what your customers perceive when forming their impression of you are what you want them to percieve?  If not, you’d better hurry to achieve that alignment.

A collection of excellent blog posts from the Social CRM community are converging on what I think is the real secret of what Social CRM is all about. 

There has been much talk about the “Pillars of CRM”.  Traditionally we have Marketing, Sales, and Customer Service as the three pillars of CRM.  Clearly the world has changed.  I talk at some length about how in the first of a series of blog posts we’ve taken to calling Helpstream’s “Social CRM Manifesto“.  Give that article a read for a good introduction to how the Customer has come to be in Control, a development which impacts every aspect of how companies deal with Customer Relationship Management.  We’ll be publishing the Manifesto as a series that all hangs together and tells the story of Social CRM, at least the way we see it at Helpstream.

Getting back to the excellent series of posts, the first one I read was by Esteban Kolsky and has the wonderful Hawking-esque title, “A Brief History of CRM.”  He’s pushing the idea that Feedback is the Fourth Pillar.  For me, making Feedback that Fourth Pillar is close, but no cigar.  CRM as its practices today is at heart a command and control system, and Feedback as a role for the customer fits into that World View perfectly (it should, Esteban knows one heck of a lot about CRM!).  My problem is that it is way too passive a description of the role the Customer will play in our brave new world, and some of the comments on the post are also uncomfortable for that reason.  We will no doubt define Feedback in a way that seems more active, but it just doesn’t do it for me.  Make no mistake about it, the Customer is in Control.  Ignore at your own peril.  This is why I am so fond of using Paul Greenberg’s short definition of Social CRM which is that it is what companies do when the customer is in control of the conversation.  That’s why I say the Customer themselves are that Fourth Pillar.  They now have a seat at your table, more on that in a moment.

Esteban and I have been trading Tweets on whether Social CRM is really a new paradigm that changes everything, or whether it is more like a new channel or refinement to CRM.  This of course is an argument that erupts at the beginning of every paradigm shift.  It is uncomfortable when things don’t fit the old model and the established priesthood wants to make things fit.  Ultimately, this is semantics.  When the Social CRM revolution is over, it will be part of CRM.  We don’t need to rebuild the whole wheel.  But for the time being, it is productive to consider the two separately.  Make no mistake: Social CRM is not about replacing CRM at all.  It is productive to insist that Social CRM be integrated with CRM, but not to view it as a subset or adjunct fifth wheel to CRM.  The reason is that any subset or adjunct might be viewed as optional.  It might be viewed that CRM will inform the adjunct what to do and how to operate, not vice versa.  Neither one is true, and the fundamental changes the web has wrought in the power of the customer make that clear.  That’s why I keep harping on it as paradigm shift.  Social CRM will change CRM much more than CRM will shape Social CRM.  When that change is complete, that will be the time to put away the banners and place Social CRM strictly under the CRM banner.  Until then, we have a lot of work to do to get organizations to understand the transformative power that Social CRM makes available.

The next great article I came across this morning was Enabling Social CRM is a Convergence of E2.0 and CRM.  This one really expands on the idea that the Customer needs to become an integral part of the Enterprise.  That’s my Customer-as-Fourth-Pillar idea in a nutshell, and is captured with this great quote:

Should it be such a leap to suggest that in order to truly engage the customer, we should invite them into our Enterprise?

Amen!  Now that is what engagement is all about.  That makes sense to me.  The best practitioners of the CRM art actually understood this before Social CRM came along, but so few actually did anything about it, that I continue to rebel against just viewing Social CRM as “more of the same.”  There are profoundly different ways to think about it.  In this case, Esteban himself is eloquent in a comment on this post (that’s why I know our argument is just semantics and he really does “get it”):

And the biggest shift we are seeing is not on technology, people (enterprise), or process – it is in the society and the customer.  The customer model we used for the past 2,000 years or so is no longer the norm.  We can setup any technology (easy, really) to support any processes we want, and train our people to do things in many different ways. But in doing all that we are not really looking at the source of all this change — the customer.

Absolutely positively 100% true, true, true.  And that last part about it not being just process is where you just have to feel Social CRM in your bones.  You either want to engage with your customers, giving them a seat at your management table as your real Fourth Pillar, or you don’t. 

If you don’t, you’re going to apply the old CRM ways and view the new Social as just a set of tools or a new channel to tack on.  This is not so bad.  I read a great story that describes exactly that model this morning too.  It describes a case where someone got terrible customer service, Tweeted about it, and suddenly they got excellent service.  What’s wrong with that picture?  Why did I have to Tweet in the first place?  Why did the company in question place me in a position of having to tell an unhappy story through the powerful megaphone that is Social Media?   Yes, the story ended well for the Tweeter, but in the end, a bad story got told.  In fact it got told not just in the Tweet but in the blog post.  It’s clearly better than a pure-CRM model, but viewing Social CRM as an “escalation mode” where you do what it takes to satisfy the screamers is just not the way to approach Social CRM.

Enough said.  The best news is that we live in a world where Social CRM is rapidly moving more and more mainstream.  The Social CRM conversation is refining and distilling it all down very quickly.  The players in the CRM market are making acquisitions and partnerships (we partner with Salesforce and Oracle, for example) and realizing that Social CRM is not optional.