Customer Matrix Benefit by Department

Matrix Benefit and Use by function and Department

In the 21st century, everyone in a company has a sales, marketing and service function, so every employee in every department needs to have the big mar- keting picture and know how he or she fits in. This chapter explains how the CxC Matrix can be used function-by-function, department-by-department to get the entire company focused on the customer.

The new marketing

The average U.S. consumer receives several million marketing messages a year, ranging from 3 million for relatively insular and disconnected custom- ers to well over 100 million per year for heavy Internet users, mall shoppers, game players, and television and video watchers.

In a constant battle to get customer attention, marketers leverage every inch of text and electronic space and every second of customer face time. Marketing messages appear in every contact both intentionally and unin- tentionally.

Just as the number of messages sent to customers has exploded, the bur- den of responding to customers—including creating and managing customer contacts across every channel and consumer stage—has created unsustain- able demands on marketing, customer support, advertising, and sales.


Customer contact management across departments

Many department resources support customer contact management across customer support, advertising, marketing, sales, and fulfillment. Resources are limited, and the demands of meeting every customer’s needs seven days a week across any mix of circumstances and at every potential customer contact is unreasonable and unsustainable. You cannot afford to grow mar- keting staff, call center personnel, IT web page designers, and copywriters in parallel with message volume requirements.

There is no more time or tolerance for traditional marketing, advertis- ing, sales, service, and IT infrastructures that communicate with customers disconnectedly and with tunnel vision that is concerned only with a limited view of selected contacts and channel niches.

Messages must be designed, delivered, measured, and refined in drasti- cally compressed timeframes to meet customer expectations. Near-time communications, automated responses, and recommendations require faster and faster execution times. They must approach zero message deliv- ery latency for web and electronic messages, i.e., automated electronic bid- ding; conditional, environmental, and rules-based product pricing; device self-diagnostics; and unattended upgrades.

Message design, execution, measurement, and refinement time compression

Figure 12.1



What’s Next?



Broadcast TV

6–9 months

1–12 weeks

YouTube, Cam2Web

Direct Mail

3–5 months

1–2 weeks

direct to print

Sales/Field Training

3–6 months

1–3 months

sfa/crm tools

Newspaper Print

2–4 weeks

1–2 weeks

digital press


3–6 months

2–3 months

digital/v press



What’s Next?




1–4 months

1–3 weeks

direct to print


1–4 months

1–8 weeks

digital signs, web connected


1–4 weeks

day parts

multi-party, dynamic content




triggers, dynamic content

Blogs, social networking

2–7 days

day parts

continuous, near time

Whereas technology and delivery mechanisms have changed, the core elements of direct marketing and direct communication have not. The CxC Matrix addresses each of the four key elements used for decades by direct marketers to govern message and contact design: List, Offer, Creative, and Media. The percentages represent each component’s traditional contribution to a contact’s performance.



who and when

Targeting and segmentation



what and why

What’s the deal?

Media 20% contact Channel, sequence, frequency

Your company needs a playbook

The CxC Matrix defines the marketing and communications roles for man- aging customers across the entire customer life cycle for each corporate department and business function.

The CxC Matrix framework, combined with the CxC Matrix Treatment Map and message libraries comprise your company’s playbook, which describes how the company will achieve its mission, strategy, and objectives executed in each contact and monitored through CxC Matrix reports.

Managing hundreds to thousands of dynamically changing contacts

without a cohesive, corporate-wide structure and playbook dooms a com- pany to:

• Overspend on under-performing contacts and issues,

• Under-fund highest return opportunities,

• Waste customer and company time and money repeating broken steps,

• Overpay for new business, excessive cost of sales, and

• Create highly inaccurate forecasting.

Now let’s take a look at the specific ways your company might use and benefit from the CxC Matrix.

executive Management


The CxC Matrix deliberately aligns corporate objectives and goals with customer values and preferences depicting customer worthiness at every customer to company contact. Thus, it links department and individual deci- sion results directly to customer performance. Linking strategy to activities provides clear direction to all stakeholders and provides a means for each employee to clearly delineate his or her role in overall customer success.

Visualizing and managing customer centricity

Many CEOs freely use the term “customer centricity” and tout the “customer- centric” aspects of their corporate initiatives and strategies. Quick research using Google and entering the terms “customer centric” and “annual report” returns over 29,000 references. It lists the “customer-centric” claims and proc- lamations of thousands of companies. Yet most executives equate “custom- ers” with sales and “customer performance” with “customer satisfaction” or

“Net Promoter Score,” all of which are lagging performance measures. Worse yet, who at the company owns “customer” and “customer performance?” Two individuals? Two departments? All employees need to clearly see their role in the customer’s context, how their decisions and job performance impact customer value.

Fixing the disconnect between strategy and activity

Despite talk about being customer-centric, rarely does executive and consult- ing rhetoric connect to execution or to employee activities, responsibilities and reward systems. As a result, few employees understand their connection to customers. They do not bother to learn how the decisions they make affect customers because, “that’s not my job.” Few employees can describe their company’s end-to-end customer experience or the stages of their consum- ers’ buying cycle.

The CxC Matrix depicts the roles of departments and managers as these roles relate to customers. Strategy is directly connected to goals, tactics, and actions with clear and simple ongoing performance measurements.

Transparency from decisions to effects

It is much easier for employees to get enthusiastic about customers than it is to generate enthusiasm for intangible metrics. The CxC Matrix helps company leaders rally employees around a common goal: customer value growth, while clearly delineating the customer contact points and respon- sible parties across the company.

The Matrix exposes the number of customers affected by a single deci- sion and the resulting effects by customer, customer segment, market, and consumer cycle. Does offering a discount to a customer for his initial busi- ness result in greater customer lifetime value and loyalty, or do discounted customers always gravitate to the lowest cost provider? Do emails that remind customers about bill payments raise collections performance, or do phone calls to a select group of customer types perform better? And

which customers have greater longevity? Measuring decision impact fosters accountability, collaboration, and innovation.

Although few employees can grasp their connection to financial perfor- mance numbers and the intricacies and mechanics of financial statements, using CxC Matrix visualizations, employees can see how their actions and decisions connect to customer behavior and performance, providing them with a sense of ownership and pride. Tying performance measurements directly to customer performance motivates employees to focus on specific activities that drive success.

The CxC Matrix lets executive managers see activities across the organi- zation while measuring customer responsiveness and monetizing success. Linking customer behavior to tactics supported by the company’s strat- egy reduces learning cycle time, improving your company’s nimbleness and

visibility to market fluctuations, competitors, and unforeseen events.

The Matrix provides management tools for quickly assessing the cost and benefit opportunities of new initiatives, product offers, mergers, acquisi- tions, and market entries by linking the company’s resources and processes to customer opportunities. The Matrix can be used to generate market and customer simulations across a multitude of scenarios to expose the resource, cost, revenue, risk, market, and customer impact.

Innovation and leadership

A manager’s expanded view of internal operations and activities in the customer’s context often uncovers numerous opportunities for repurpos- ing, repackaging, and repricing services, while also uncovering untapped customer needs. Continuous observation of where, how, when, with whom and under what circumstances customers use and access your products and services often spawns innovation and new market discoveries.

Corporate guidance is executed at each customer contact and measured for its effectiveness on an ongoing basis to ensure that the company is operating in synchronization with customer needs to fully realize market potential.

Budget allocation

Executives use the Matrix to weigh the benefits of competing budget requests using impact-per-customer as the criteria for “go” and “no go” decisions.

Departments weighing investment decisions for new initiatives should be required to demonstrate the cost and revenue associated with their rec- ommendations. The Matrix highlights which specific customers and seg- ments will be affected and the associated revenue and cost consequences, while also quickly highlighting operational and time-to-market issues.

The Matrix provides an alert when multiple departments’ decisions affect the same customers and a means to overlay multiple department and cor- porate initiatives to uncover potential tactical, process, departmental, and customer conflicts.

Executive Management CxC Matrix deliverables

• Visualize: Company-wide strategy by customer.

• Analyze: Weave customer metrics into corporate decision-making.

• Monetize: Resource investment measured by yield per customer.

• Prioritize: Target resources and investments at ROI initiatives.

• Optimize: Establish procedures, measurements, and reward systems to promote continuous performance improvement customer-by-customer and contact-by-contact.


Financial managers use the CxC Matrix in conjunction with other financial tools to assess enterprise-wide and departmental cost and revenue at a budget line and departmental level. The Matrix provides a means to assess, quantify, and monitor budget and resource decisions based on customer

impact and is especially useful to complement other risk and decision sce- nario assessment tools.


The Matrix helps finance managers observe business performance by cus- tomer and by contact. This information is directly linked to the responsible manager, systems, and activities, providing exceptional insight into revenue and cost drivers. Contacts and activities tied directly to business owners and measured by customer performance provide improved budget and resource governance and monitoring. Financial analysts can assess the impact of cost reductions or budget reallocations by the impact per customer, as well as uncover unforeseen negative impacts.

For example, you can study cost reduction in a call center, changing hours of operation for a particular office, or charging for a previously free service and run through scenarios to project customer impact and the resulting impact on revenue and costs.

Activity-based costing from a customer basis

If your company uses activity-based costing methods to scrutinize depart- ment and company budgets, you can benefit from linking customer transac- tion costs, department activity costs, and the Matrix’s projections for future activities. The customer dimension adds additional insights into “what if” scenario planning, cost allocation, and cost attribution dynamics.

The Matrix is designed to connect and relate products, expenses, activi- ties, lines of business, overhead, and resources in the way that a customer uses them. It explicitly shows which customers and which customer groups are affected by resource and service changes.

Customer performance benchmarking

Financial and business analysts use the Matrix for monitoring “business as usual” and exception management analysis by observing aggregate cus-

tomer and activity counts by channel, department, and activity. A fluc- tuation in any performance indicator alerts analysts to an unforeseen and unanticipated change in business. Analysts are able to quickly isolate the abnormal area and drill down to the causes while alerting departments about downstream impact and changes to revenue and cost forecasts.

Explaining finance to internal clients using customers as a metric

Business analysts, statisticians, and people responsible for designing math- ematical models and business simulations can use the Matrix visualization as a backdrop to explain how predictive models and root cause analysis is performed and where the results of their work can be put into action. The Matrix provides a means for modelers and business analysts to explain how decisions made in one contact or stage can affect performance. The Matrix’s graphics, with numbers included to delineate customer path, depict the busi- ness process in a manner that enables technicians and business managers to collaborate on building, measuring, and refining optimum solutions.

Fewer financial surprises

By providing transparency down to a customer and activity level and visibility across all customer life stages, the Matrix reduces the likelihood of financial performance surprises.

Finance CxC Matrix deliverables

• Visualize: Revenue flow and costs across the enterprise linked to customers and activities.

• Analyze: Set benchmarks and be alert for deviations. Alert manag- ers to changes and financial reporting impact.

• Monetize: Monitor the cost and potential revenue of each cus- tomer and each customer contact.

• Prioritize: Projects, budget decisions, critical business areas and risks based on impact.

• Optimize: Continuously monitor contacts for opportunistic invest- ment and cost avoidance.

information Technology and Systems Management

The mower story

The mower story from earlier in the book implies that the Acme Company is in lockstep with the customer’s needs, interests, and ability to pay. As has been pointed out, this is not by chance but by a carefully thought-out execution of multiple contacts with scripted messages purposely designed to drive the customer to act. This process illustrates the benefits of capturing and leveraging customer information across each contact for use in future contacts and programs.

Figure 12.2


• Age

• Income

• Location/ proximity

• Channel

• Projected value

• Lifetime value


• Brand

• use history

• Service record

• expectancy

• Features


• History

• Purchase

• Contact history


• Campaigns

• responses

• Channels

Maintaining a record of each customer’s contacts, preferences, ability to pay, and particular nuances is no longer just inside the heads of the best

performing sales people. Today, that information is contained in a variety of customer information files from internal and external sources.

This information ensures the best possible outcome at each customer contact point, from scope of offers to script messages. It can be used to alert downstream systems, schedule resources, and for inventory prepara- tionall in anticipation of the customer’s next move. Information from each customer sequence can be recycled to benefit internal contact resources, partners, third parties, and even customers, as in the now famous Amazon web page message, “Customers like you also purchased . . . ”

Structuring the mower program using the Matrix enabled each depart- ment to reuse the successful program elements without bearing signifi- cant expense and complexity for future programs. Additionally, isolating and documenting all of the program’s elements enabled managers to test under-performing components while automating and reducing the cost of successful elements.

The Matrix does not assume a company has or will have to build a data warehouse in order to intelligently manage each customer contact. The Matrix design assumes that data sources will constantly evolve in the ways they collect, capture, and store customer and contact data. Therefore, it is not reasonable or cost justifiable to consolidate all customer and contact information in one place. Instead, the Matrix represents data and functions that may exist in third party systems, partners, and vendor systems. It relies on the framework, business, and data integration exchanges and rules to deliver a cohesive and singularly transparent customer experience.

The CxC Matrix system analysis

The challenge for today’s technology and information professionals is to design and manage a corporate customer architecture that reaches out across the company and across the Internet to integrate and transform vast volumes of available data as quickly as possible into information assets that generate new insights and realize new business opportunities.

Such an undertaking is no small task. Today’s enterprise systems extend beyond the walls of the corporate data center to include customers, suppli- ers, partners, and electronic marketplaces. These systems interact with data- bases, application servers, content management systems, data warehouses, workflow systems, search engines, message queues, web crawlers, mining and analysis packages, and other enterprise applications.

It is important to note that “systems” is used to describe electronic sys- tems as well as non-electronic systems, such as putting an envelope in a box, physically moving around a store, and handwritten notes indicating inven- tory counts and product notations. The Matrix is meant to capture and map every customer contact—intentional, unintentional, scripted, unscripted, firsthand, secondhand, or even corporate and customer folklore.

Figure 12.3

• web

• web

• service automation

• fulfillment

• CCm

• direct mail

• direct mail

• personalization

• fulfillment

• elogistics

• email

• continuity

• CCm

• direct sales

• form sharing

• email

• self help

• enewsletter

• Vru

• CCm

• web

• service alerts

• knowledge

• web

• direct TV

• 3G

• loyalty

• continuity

• CCm

• chat

• CCm


• chat

• CCm

• eCrm

• personalization

• automated service


• portal

• email

• email

Technology investment decisions

Technology groups use the Matrix to weigh budget allocations for customer systems and customer system functionality as measured by the impact per customer or customer group. For example, a company seeking to purchase a customer relationship management system can demonstrate the value of the system by estimating the additional customer revenue that the system will generate by consumer and channel stage.

Additionally, when comparing proposed systems with similar functional- ity, the Matrix can be used to isolate the benefits of that functionality and its impact on the customer contacts.

Project management prioritization

Technology departments can use the Matrix to prioritize projects in a devel- opment queue and help allocate limited resources by plotting the areas that will be affected and the net benefit of each project, measured by increased customer revenue and decreased activity cost.

Figure 12.4 Sample List of CxC Matrix Systems

• Accounting

• Advertising

• Business intelligence

• Business performance management

• Business process management

• Call routing

• Care center inbound

• Compensation

• Contact management

• Direct marketing

• Distribution

• email hosting

• email management

• enterprise marketing management

• erP (enterprise resource process) management

• Financial reporting

• Fraud detection

• maintenance

• marketing automation

• master data management

• modeling

• Network design

• Offer management

• Order management

• Outbound telemarketing

• Packaging

• Partner management

• Security

• Self service

• Self service kiosk

• Self service mobile

• Self service phone

• Self service web

• Shipping

• Social media

• Statistics

• Subscription management

• Content management

• Fulfillment

• Performance management • Supply chain management

• Cost accounting

• Credit authorization

• Credit modeling

• Game management

• General ledger

• Inbound telemarketing

• Performance reporting

• Point-of-sale

• Point-of-purchase

• Telephony

• Text-to-voice

• Voice-to-text

• Crm (customer relationship

• Integrated communications • Predictive modeling

• Web analytics


• Customer service

• Customer survey

• Data matching

• Device design

• Device management

• Digital asset management

• Inventory

• IT operations

• Lead management

• Licensing

• List management

• Location security

• Logistics

• Printing

• Public relations

• Quality systems

• resource management

• returns processing

• reverse logistics sales automation

• Web chat

• Web hosting

• Web presentation

• Web security

• Work flow

Visual aid for data and process mapping

Business analysts and information technology workers use CxC Matrix visu- alizations to scope database and data coordination designs across dispa- rate systems, identifying integration points and data exchanges. The Matrix provides a schematic that connects customers to all company systems, including third party systems that are sometimes not considered part of IT planning.

The Matrix emphasizes and highlights the importance of process design from the customer’s perspective, delineating success and failure points from a customer point of view while providing a performance metric for justifying process redesign or alternative resource investment.

Information Technology CxC Matrix deliverables

• Visualize: Comprehensive customer technology architecture; cus- tomer data movement; systems integration points; department to department connectivity; third party connectivity; process flow; customer information ecosystem; data, system, process gaps; world class customer infrastructure design.

• Analyze: Technology investments, prototype system designs, resource and technical alternatives, outsourcing, data quality, disaster recovery, security, system vulnerability, fraud.

• Monetize: Projects, IT investments, data, data quality, outsourced partners, expert systems.

• Prioritize: Resources, technology investments, solution areas, IT investment allocation.

• Optimize: Infrastructure, resource allocation, customer data process flows, reporting and alert systems, business process management initiatives.



The mower story might drive you crazy if you work in operations or if you own or manage a local store. You might think, “Am I supposed to have 20 lawn mowers of each variety stored at each location in the hope that some- one might click on that email?”

In the background, the mechanics of this program started with a con- tinuously running computer program, which detected that a particular store had too many lawn mowers in stock. The mower was then targeted for liquidation, and the company’s analytical and operations technology linked together to propose scenarios designed to achieve the highest profit point by the fastest means possible.

The program calculated a number of liquidation options, including mov- ing the mowers to another store, selling the mowers to a wholesaler, and returning them to the manufacturer. The inventory system noted that the mowers were assembled, which added costs and constrained liquidation options.

The program was designed to match company, finance, partner, and customer objectives respectively:

• Sell the product at the highest achievable margin,

• Gain new customers,

• Grow relationships, and

• Achieve optimum yield per customer.

The program evaluated the options for moving the lawn mowers through each of its channels, calculated the total costs, and predicted best customer and stakeholder outcomes. The program recommended that the mowers be promoted directly to the store’s local market, to existing customers who lived within a 15-minute drive of the store, and who bought a similar or less-featured mower more than two years ago.

The program aligned the company’s objectives with customer values and preferences to achieve the best outcome for the business and the customer.

The program performed these calculations and decision-making as a back- ground process with no human intervention. The eventual program was put into motion from need to concept to initiation in less than three seconds.


The Matrix delivers product demand and associated resource demand by channel, contact point, and time window, exposing most of the elements in the customer demand chain. Where possible, it connects the product or service needs and requests of specific customers to specific distribution outlets.

Advanced logistics, inventory management, and shipment planning sys- tems can be linked to the Matrix to provide deeper insight into resource consumption, alternative delivery planning, and short-term, mid-term, sea- sonal, and long-term outsourcing opportunities.

Quality controls

The Matrix delineates the cost and revenue impact of poor quality products and service delivery by measuring it in lost revenue and increased customer management costs. These insights linked to the stages of the consumer cycle highlight where business processes or quality problems might jeopardize an entire product line, geography, line of business, or commercial channel such as ecommence.


As outsourcing and co-sourcing continue to grow as resource solutions, you need to be able to measure their impact on customer flow, customer value and the entire consumer cycle. For example, do outsourced product repair services have a negative impact on repeat sales? Does one delivery process and set of vendors impact customer profitability differently than another

alternative? Typically, these types of decisions are made with sparse data, gut instinct, and focus group surveys. However, the Matrix provides a means for experimenting with hypothetical scenarios and quantifying the customer impacts of changes. Then it provides a means for ongoing monitoring and measurement.

The customer perspective also provides the added benefit of parsing customer flows so that high value customers receive preferred treatment and resources while lower value customers are directed to lower cost solu- tions. Using the Matrix, you can experiment in share-gain relationships with outsourcers where the third party directly benefits in a proportional share of the increased yield per contact. Each contact should be evaluated as a platform for additional revenue streams, as well as an opportunity to grow the sponsor company’s long-term customer value.

Vendor negotiations

You can use explicit customer flow metrics and their related revenues and costs to negotiate performance contracts with vendors and partners. Whereas some companies use customer survey samples or customer observation sampling at selected operational stages, the CxC Matrix provides a consis- tent operations metric covering all contacts (call backs, returns, complaints, unpaid items, etc.) overtime, pinning success to actual customer value.

Operations CxC Matrix deliverables

• Visualize: Product, service, and resource demand; supply chain linkages; demand chain; inability of vendor to coordinate with others; resource allocation; demand flow; inventory movement; customer management flow; world-class customer operations design.

• Analyze: Resource utilization, alternative resource configurations, just in time service/product opportunities.

• Monetize: Product and service outages, resource utilization, unused message slots, customer satisfaction, and vendor man- agement.

• Prioritize: Process and system upgrades, critical path revenue and cost operations.

• Optimize: Supply chain, demand chain, vendor and supplier resources, distribution, asset management, facilities configura- tion, and expert contact management.

human Resources

My company, my job from a customer’s perspective

The CxC Matrix is the best tool for educating employees about how a busi- ness operates from a customer perspective. It lets employees walk the customer’s path while showing the departments, managers, systems, and processes that support each consumer stage.

New employees, transitioning employees, and managers benefit from improved understanding of the functions related to meeting customer expectations. The performance numbers, customer value, customer life- time revenue, and costs become clear and simple measures that employees grasp.

Employees also tend to feel a sense of responsibility when they under- stand the company’s role in meeting customers’ needs.

Education roles and goals

The Matrix provides employees with a sense of ownership, accountability, and responsibility, and human resources managers benefit from the employ- ees’ broader knowledge of corporate operations. This makes it possible to improve business problem-solving while stressing the importance of com- munication skills, reporting, quality efforts, and documentation.

The Matrix’s trans-departmental and trans-functional design broadens employees’ perspective regarding their individual impact on overall business. It makes them aware of the operations and provides some education regard- ing other departments, functions, and systems across the company.

The customer-eye view encourages employees to participate in suggest- ing solutions and making recommendations about improving operations, functions, and policies. Employees may uncover marketing, analytical, pro- cess design, or selling skill sets that would otherwise go unnoticed. The enterprise view assists in career development by providing employees with exposure to the skills required and the functions performed in other parts of the company.

Resource planning and scheduling

Managers and employees use the Matrix to observe customer flow and activ- ity at different times of the day, different days of the week, and different seasons to appropriately schedule resources and ensure that the right skills are available at each critical customer contact point.

Pay performance and incentive design

Managers also use the Matrix and associated key performance indicators to evaluate employee job performance. The CxC Matrix creates simple, vis- ible, and common benchmarks for monitoring ongoing job performance, as well as quantifying performance related to each employee’s activities and decisions.

The CxC Matrix measures the value of individual employee decisions and activities on business growth and cost containment. Managers find the Matrix suitable for designing, monitoring, and executing incentive pay structures and performance rewards systems based on customer perfor- mance. The metrics are standardized in the system, providing consistency over time. Yet its breadth shows where upstream and downstream events and circumstances may positively or negatively influence performance.

Human Resources CxC Matrix deliverables

• Visualize: The customer journey across departments, functions, systems, and the employee’s individual role.

• Analyze: Employee performance, interdepartmental processes, resource allocation, scheduling, payment, and reward systems.

• Monetize: The impacts of decision-making, activity, quality initia- tives, and customer satisfaction.

• Prioritize: Specific functions within roles, department resource requirements.

• Optimize: Customer yield per employee.


A primary Matrix business objective is to make the company and the customer-facing resource in each contact look great, wise, helpful, and knowledgeable. The accumulation of previous contact success, customer information, marketing knowledge and successful resolutions learned and stored from similar customers allows the company to effortlessly deliver a perfect, profitable contact experience.

Salespeople (which includes everyone, since everyone is in sales) must understand:

• Where the customer is in the buying process,

• The channels and activities the customer conducted, and

• An estimate of the customer’s next actions, timing, needs and contacts.

All of this must be balanced with the customer’s potential value and the probability of achieving that value.

In a perfect system, the CxC Matrix not only shows what customers have done, but it predicts what they are likely to do next and when. The system alerts the salesperson and resources around the company when a

customer does not act, and it provides them with the means to re-engage the customer through the right channel with the right message, offer, or recommendation. Then it monitors the potential outcome. It is important to remember that “do nothing” is often an option when a customer has a low probability of acting over the next 60 days and when the customer has a low probability of ever buying or making a customer referral.

You’re invited to the 1% Success Party

Marketers and salespeople like to tell customer success stories like the one about the mower, emphasizing the excellent coordination, foresight, customer insight, analytics, and programming. But they shy away from discussing the fact that marketing and sales efforts rarely achieve double- digit success.

Less than one percent of most promotional email programs, direct mail, telemarketing, and other advertising programs result in a sale. The best salespeople achieve success rates of less than 10 percent per customer con- tact, and most of them achieve less than 1 percent.

Marketing does not put up banners that say, “We hit 1%!” Salespeople don’t celebrate making 40 sales pitches to get a single meeting or to get one person to actually buy “the mower.” The real opportunity in marketing and sales lies in the 99 percent of the wasted contacts.

One fallacy of traditional sales and marketing measurements was illus- trated in the simple need, shop, buy example earlier in the book. Compa- nies under-represent the number of contacts responsible for making the eventual sale or solving a customer problem. Yet all of the other contacts that the company conducts and funds likely contribute to the eventual sale. Companies that fail to recognize the contribution and value of all related contacts are in danger of under-investing or eliminating the contact points that ultimately persuade a customer to purchase.

The Matrix unveils the 99 percent of unmentioned contacts, plus all of the post-sale contacts, to expose hundreds of additional cross-sell, up-sell, referral, and affiliate revenue opportunities.

Examining the program from the business side demonstrates typical marketing and sales efficacy, while emphasizing the extreme importance of success at each consumer cycle. As fewer customers progress through the customer cycle, revenue success depends on fewer prospects, but more contacts.

In a multi-wave marketing program customers are targeted more than once and often across multiple channels in a predefined sequence using a set of rules to orchestrate follow-up contacts.

The mower program insights

The mower marketing program was one component in a multi-wave-market- ing program. It matched multiple customer groups to multiple marketing, sales, and customer service programs.

Sales CxC Matrix deliverables

• Visualize: Customer pipeline by stage and channel activity; upcoming customer activities and stalled customers; revenue opportunities across the entire company; costly low potential prospects.

• Analyze: Return on sales channel, sales territories and rationale, opportunity potential versus sales resource constraints, season- ality, demand chain; pipeline barriers, downstream impact to customer lifetime value.

• Monetize: Customers, activities, sales investment, sales cycle, return per activity per channel, sales partners, markets, regions, revenue/lead cost per source.

• Prioritize: Activities and resource allocation, margin per product and service combinations, lead sources, existing relationships, portfolio management, partners.

• Optimize: Activities and resource allocation, lead generation and cost per lead by stage and channel, referrals, cross-sales, up-sells, affiliate sales, margin per sale, margin per customer.


Your company is vulnerable to liability at each stage of the CxC Matrix. From customer data breaches to misrepresentation of services, account misman- agement, negligence, physical injury, etc., the Matrix graphically represents every customer contact along with every company promise and obligation across all stages of the consumer cycle. Additionally, the Matrix provides managers with performance visibility and risk assessment capabilities that show responsibilities related to governance, performance reporting, perfor- mance disclosures, and material events.

The Matrix provides an overview of most of the customer liability areas, and it also provides a means for recovery, customer notification, and cus- tomer path re-creation that can be used to remedy the effects of an event, product, or service. The Matrix provides a means to quantify an event’s expo- sure, the number of potential customers affected, and the contact points related to any incident.

The CxC Matrix can also be used to retrace a customer’s communications, notices, and instructions, as well as all of his contacts—actual and assumed (based on probability of like customers). This allows you to comprehensively recreate a customer’s entire relationship with your company. Consumer cycle re-creation provides you with a road map for where, when, and how often to provide customer instructions, warnings, support, and assistance regarding the uses and alternative uses of products.

Legal departments and corporate counsel should use the CxC Matrix to help customers manage their own relationships by providing a customer- centric road map that highlights all company, industry, market, legal, government, and trade sources. These references and guidance materials

across each CxC Matrix stage serve as a virtual “You are here” map for every customer across the information gathering, purchasing, use, and disposal consumer cycles.

Legal departments should also consider geographic laws and regulations relative to product and service delivery. Countries, states, regions, towns, and channels have different governing bodies, each of which may require their own version of product and service delivery, disclosures, notifications, fees, and taxes. The CxC Matrix can be modified for each region to document and ensure compliance while providing material proof of your company’s acknowledgement and enforcement. Likewise, you can analyze the impact, cost, and resources required when entering new markets and when regula- tion changes are being considered.

Note: Managers who move from one region to another should be briefed using the Matrix in order to highlight important customer notification, disclosure, liability, information, and treatment differ- ences from their prior posts.

Issues of privacy

As customer treatments become more complex, dynamic, and multi-party, it is inevitable that legal and regulatory bodies will demand that compa- nies provide greater transparency to the elements used for each treatment. With digitization and the speed of information exchanged between compa- nies and from system to system, customers will demand to see how their personal information is used to determine pricing, customer service, or warranty coverage. Regulators will slowly seek to understand the mechan- ics of proprietary and dynamic pricing and offer systems, as well as their affect on fair trade, product distribution, and service distribution.

Likewise, customers will be within their assumed rights to ask companies to recreate the context and rules used to construct special offers, messages, and pricing.

Our data went where?

Data breeches will continue to grow as more information and transactions are digitized. As a result, personal and confidential information provided by customers will be continually at risk. Additionally, company information stores and data networks will continue to be pirated, poached, and hijacked, requiring companies to insist on additional third party customer authenticity validation and authorization among payment systems and partners.

Customer backlash is a likely result of the increased exposure of con- fidential data. Legal or governmental representatives may demand specific disclosures regarding how, why, when, where, and for what purpose customer information was stored, accessed, and modeled by companies other than the business customers believed they were dealing with directly. Transpar- ency is ripe for continued scrutiny, whether to data vendors, credit bureaus, transaction processors, data exchange, integration companies, subsidiaries, or lines of business.

It is likely that companies will face not only growing legal and financial liability for misuse, mishandling, and negligence related to customer data, but also for not using customer data when that information could benefit the customer, as in the “Mad Cow” case reported in the Washington Post (July 6, 2004). Although some customers are troubled by the privacy implications of data capture, many assume that their information will be used to their benefit. Customers are likely to also assume that they should have access to their personal information in the company’s context. They will want to see who had access to their information and how their information was used to conduct business. If these assumptions are not met, a negative customer experience could result.

In the “Mad Cow” case mentioned above, a female customer had pur- chased ground beef from a local market, using her customer loyalty card, which recorded every item she bought.

She used the beef to cook a holiday dinner and only a couple of weeks later learned from a newspaper article that 10,000 pounds of beef potentially

tainted by mad-cow disease (MCD) had been recalled from stores in Western states, including hers. She read about another customer whose purchase had been recalled after he demanded that the store check his customer loyalty card to determine if the meat he had purchased was part of the recall.

The female customer then asked that her card be checked to verify the safety of the meat she fed to her family. However, the store made her make the request in writing and come to the store’s office for the records. She eventually learned that the meat she had fed her family was part of the recall. The result was a lawsuit against the store, claiming that it had the ability to alert her to the recall and did not do so.

Legal CxC Matrix deliverables

• Visualize: Customer contacts and implied liability by life stage, channel, product, market, and region

• Analyze: Exposure, remedy scenarios, risk insurance coverage, partner/vendor liability

• Monetize: Cost to notify affected customers, scope of various legal scenarios, cost of compliance and governance, exposure and risk related to data handling

• Prioritize: Communications points, highest risk business areas, documentation, communication guidelines and procedures.

• Optimize: Issue discovery and escalation, insurance protection, risk prevention

Customer Service

“Eighty percent of 2,049 US adults surveyed decided never to go back to a business/organization after a bad customer service experience. The study clearly indicates that an organization’s customer service level is a defining factor that will make or break a company.”

—“Studies Reveal Consumer Reaction to Bad Customer Service”,

Companies invest millions of dollars in customer service and satisfaction surveys, brand research, awareness studies, and measures like Net Promotion Score and J.D. Power. Unfortunately, these same companies often find it dif- ficult to persuade executives, workers, and shareholders that the information reported has a direct impact on company performance.

The Matrix measures how customers “vote with their feet” and does not rely on self-reported information or sample surveys from customers. However, traditional surveys and research techniques can greatly enhance the Matrix by isolating customers at individual stages and channels to poll them as to why they did or didn’t move forward with a purchase decision, as well as why they purchased again. The Matrix can be used to identify pockets of customers who hold substantial potential revenue, cost, or risk. These groups of customers can be isolated, analyzed, polled, scrutinized, and tested to develop actionable, measurable business performance improve- ment initiatives.

The Matrix acts as a sensor across all customer contacts to alert each contact point regarding anticipated customer contacts, contact timing, vol- umes, and interests. The Matrix can also be used to capture best performing tactics and methods for quick replication across the rest of the customer contact points.

Since the Matrix tags customers at each stage in their process, your managers can anticipate contact flow when an increase in similar customer

problems arise or when new marketing messages and promotions hit the market, resulting in increased volumes of customer phone calls, emails, and site visits.

The Matrix records customer service contacts and post-contact customer activities, providing the most reliable measure of problem resolution and customer satisfaction.

Eighty-nine percent of people who owned cars from a certain manufacturer said they were very satisfied, and 67 percent said they intended to purchase another car from that manufacturer. Fewer than 20 percent actually did.

In another survey, nearly half of consumers said poor service led them to change service providers in at least one industry in the past year. When asked to further explain their reasons for switching, the greatest number of these respondents (61 percent) identified poor service or product quality; to get lower prices (46 percent); a service representative’s lack of knowledge about a provider’s services or products (39 percent); lack of customized solutions (22 percent); company policies that create bureaucracy (19 percent); and technologies that delay or stop service (19 percent).

“Poor Customer Service is Top Reason Consumers Switch Service Providers,

Accenture Survey Finds,” Business Wire, 7/26/05

Root cause problem analysis

Customer problems don’t start in customer service; they end up there. The CxC Matrix tracks customers from awareness through disposal. Customer service representatives and customer process designers can trace problems back to their root cause because the Matrix tracks every company, prod- uct, partner, and community contact. It replays the whole story from the customer’s perspective.

Customer Rage Points across the CxC Matrix

The 2005 National Customer Rage Study, sponsored by the Customer Care Al- liance (CCA) in collaboration with the W.P. Carey School of Business at the University of Arizona, provides insight into the causes and consequences of customer rage. The study focused on the most serious problems experienced by individuals (random sample of U.S. households) with products and ser- vices during the period August 2004 through August 2005.

Seventy percent of all respondents reported rage with customer service due to (in order of occurrence):

1. Unsatisfactory product (includes financial products);

2. Unsatisfactory service;

3. Incorrect/deceptive billing;

4. Unsatisfactory repair;

5. Product/service is not as agreed upon;

6. Deceptive advertising/packaging/pricing; and

7. Dealer/salesperson misrepresented the product/service.

The most common “damages suffered” included loss of time (53%); loss of money (30%); and physical injury (5%).

Mismanaged contacts spawn additional costs across a company in obvi- ous areas like shipping, repair, call handling, and returns, but the Matrix also quantifies additional costs caused by forfeited future business, negative word-of-mouth, and customer replacement. The Matrix clearly shows the cost of mismanaged contacts with a high potential-value customer and mar- ket segment. But it also provides a comprehensive view of the resources and options for rectifying or rerouting high potential–value customers through alternative process and customer paths.

Help yourself

The Matrix is designed to help you design self-service processes and guide- lines so that customers can self-navigate their own solutions or contribute to building better solutions.

Managers use the Matrix to plot customer service recovery and care contact procedures, paths, best practices, and metrics. The Matrix provides a unique view of problem resolution that exposes alternative channels and resources along with a customer-specific historical view of all steps and channels that a customer has journeyed.

As technology becomes more advanced, you may be embedding ser- vice recovery tools, alerts, and notifications in your products. One obvious example is a car service alert that notifies a customer that service is recom- mended in 1,000 miles. Another example is a printer notification message that alerts service companies and suppliers. Still another is a new product reminder delivered to a sales prospect based on prior inquiries, which uses the estimated life expectancy and replacement cycle of the selected product. It may also include a special financing offer for the new product.

You should perform a similar exercise for your business to chart customer paths and highlight where customer recommendations should be inserted. These will add value to a customer’s overall experience and generate contacts to ensure future business and revenue, both direct and indirect.

Improved customer management—using Situational Awareness

Situational Awareness (SA) is one of the CxC Matrix’s fundamental design principles. In customer service, Situational Awareness can be defined as understanding what is happening with the customer so you can figure out how to help.

The CxC Matrix uses situational awareness principles to prepare cus- tomer-facing personnel for assessing customer situations and solutions. More importantly, SA is used as a basis for automating the many decision functions required to support unattended situations where an employee is not engaged in a company decision.

Generating revenue from captive contacts

You can use a sophisticated telephone system that intelligently routes calls based on caller ID, customer registration, or neighborhood information. This determines which call center, customer service representatives (CSRs), treatment, and offer the caller will receive. The telephone system exchanges data with the offer management system, order management system, and customer management systems to continuously monitor and reprioritize call and offer allocations. This refines the allocations based on offer performance, resource availability, and contact success. The intelligent call routing system usually reduces call center costs because calls from both new and repeat customers are resolved quickly and to everyone’s satisfaction.

Outsourcing agreements and business processes

Your company can continue to seek opportunities to outsource customer contact functions, customer support, email hosting, offer design and man- agement, copywriting, and product and service design and automation. You should knowingly choose which contacts you must maintain in-house or under direct management in order to leverage your company’s core com- petencies. Then you must monitor the strategic fitness and cost benefit

of outsourcing every other function. The Matrix provides a means for you to dictate explicit service levels and process level terms for any outsourc- ing arrangement, while also providing performance visibility measured by customer.

Customer Service “Think Like a Customer” deliverables

• Visualize: Individual customer paths, aggregate customer paths, detailed customer interaction directory, best-in-class contact design.

• Analyze: Customer service resource allocation, root cause problem analysis, contact flow, resolution processes, partner and affiliate contacts, customer satisfaction relative to customer paths.

• Monetize: Value per customer, contact, call incident, resolution, revenue saved per customer, add-on revenue per customer, cus- tomer cross-sells, up-sells, and referrals.

• Prioritize: Match resources to opportunities, isolate problem sources, high potential customers, low performing contact points.

• Optimize: Resolution path, customer referral process, customer review process, customer successes, and best practice process templates.

Customer Relationship Management—CRM

The true measure of CRM is change that impacts each customer in each contact. Customers expect simplicity.

Many companies have invested billions of dollars on Customer Relation- ship Management (CRM) systems, implementations, consulting, and out- sourcing. Yet customer satisfaction scores continue to decline, and customer rage and frustration continues to grow.

How can it be that these enormous investments have created less satis- fied and more disgruntled customers?

Figure 12.5

Customer value management

Step 1: Customer definition

Step 2: Customer value (monetize)

Step 3: Customer segmen- tation (prioritize)

Step 4: Customer level (optimize)

∂ ∂ ∂

Technology channel and infrastructure management

Step 1: Customer data aware

Step 2: Personal- ization (monetize)

Step 3: Automation (prioritize)

Step 4: Intelligent customer process level objectives (optimize)


∂ ∂ ∂

Technical and com- munication management

Step 1: Treatment analysis (analyze)

Step 2: Piecemeal personal- ization (monetize)

Step 3: Treatment X channel X customer (prioritize)

Step 4: Continuous treatment improve- ment (optimize)


∂ ∂ ∂

Human performance management

Step 1: Subjective productivity performance

Step 2: Qualitative + quantitative performance (monetize)

Step 3: Customer- based performance reviews portfolios (prioritize)

Step 4: Gain share performance compensa-

tion (optimize)


∂ ∂ ∂

The CRM label includes everything from call center systems to predic- tive modeling and data marts. The smartest firms and consultants have pieced together solutions, frameworks, and methodologies. They have writ- ten books and guides, and they have conducted endless sessions on best practices and proven methods. Still, customers are dissatisfied.

Of course, the breadth of what is classified and sold as CRM is part of the problem. CRM is just too unwieldy. But the biggest issue has to do with projects that are initiated with little regard for how a customer’s experience will change after the investment. What will be different the next time the customer makes a phone call? What will be different when the customer

visits a store or website, opens an envelope, or uses the product or service? The result of the customer’s changed contact should be the single, clear objective of each CRM investment. Will the contact generate more revenue? Will it cost less but achieve the same level of revenue, or neither? Figure 12.5 illustrates CRM maturity stages that apply to both business-to-consumer companies and business-to-business companies across most industries.

Use the CxC Matrix to visualize CRM

Most business managers and executives are overly polite when it comes to discussing CRM. It sounds foolish to say out loud, “We are not concerned with customer management.” Once, when working with a major telecommu- nications firm, I was asked to meet with a group of the company’s regional presidents and their CRM team. The company had spent nearly $150 million on CRM technology and a multiple of its technology investment on imple- mentation and training over the prior two years. I was invited to discuss “CRM Strategy” and to help them answer, “What went wrong and how to fix it.” After introductions, we started the meeting with a simple question directed to each of seven presidents, “What did you expect would be differ- ent after CRM’s successful launch?”

While each answer was slightly different, they all circled around cost reduction, improved customer satisfaction, improved customer performance visibility, and faster/less expensive problem resolution. The information and technology participants and the external consultants responsible for the project had slightly different answers. However, neither group answered based on what the customer would experience differently the day after the successful launch.

You can’t manage what you can’t see

To get everyone to agree on a definition of CRM, I sketched out a rough 15 X 6 CxC Matrix drawing on the large whiteboard. I quickly explained that each

cell represented a customer contact point across the buying stage and each row represented a channel category. Then came the big question. “Which cells did you expect to impact with your CRM initiative?”

This was the most uncomfortable part of the meeting by far. The head of information technology came to the front of the room and put X’s in boxes under “care and support, repair, collection and delivery” and declared, “That is what was in scope.”

The rest of the group sat quietly and stared at the empty space in the remaining 83 cells.

“The purpose of a company is to create a customer . . . The only profit center is the customer . . . Therefore the business has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results: all the rest are costs.”

—Peter F. Drucker

CRM “Think Like a Customer” deliverables

• Visualize: Total customer experience, customer performance by department, customer handling and communication procedures.

• Analyze: Resource allocation, customer flow and routing alterna- tives, resource capabilities match to market needs by contact, contact resource fitness.

• Monetize: Customer activity cost, resource costs, customer poten- tial, opportunity costs.

• Prioritize: At-risk customers, customer defection points, unde- rused contacts, customer bottlenecks, customer growth areas, resources, alternative sources.

• Optimize: Customer value, internal customer communication processes.

Marketing feeds Matrix Slots Contact by Contact

The CxC Treatment Map

The CxC Treatment Map exposes the most granular level of the CxC Matrix: the messages and rules executed at each slot in each customer contact. Fill- ing the slots is most often the responsibility of your marketing department. Your marketing department likely manages advertising messages through an agency, sales, corporate relations, vendor relations and service messages through those respective departments all of which are coordinated and cho- reographed to sustain the company’s brand value and profit margin.

The Treatment Map evaluates how well each contact meets your cor- porate objectives. It can identify opportunities for improvements and can uncover misalignments between customer needs, business objectives and actual treatments.

The Treatment Map verbally walks through the current and potential treatments and encourages participation from all of the related departments and third parties. Again, each scenario and component is monetized using actual or estimated values in order to test and build the best performing customer experience solutions.

Companies using marketing automation systems, marketing resource management, campaign management, offer management and advanced contact management systems likely have the essential tools and know how to extend these systems capabilities to the broader task of managing slots and treatments across the entire breadth of the CxC Matrix. The Treatment Map fosters collaboration across multiple departments and disciplines to create an unparalleled transparency to the customer experience for all of the parties responsible for creating, hosting, transacting, measuring, and modeling each contact and contact stream.

Treatment Map Example

The CxC Matrix Treatment Map sample excerpt that follows depicts the company’s current treatments and contact delivery systems, channels, man- agers, objectives, and system capabilities. Each cell in the Matrix Treatment

Map has a corresponding monetization formula that tracks the cost and potential revenue projected for each treatment and treatment combina- tion.

Figure 12.6

Channel/ medium

Response channel




Current treatment

Current segmentation

Direct mail Print Email

Web ads



yes, using script and dept. designed rules

place order

configure order, accept

customer offer by channel


abandon order

volume dependent

customer offer by channel

do-not-contact request

add to DNC list

customer offer by channel

Direct mail Web ads



agent web- based order entry

yes, using script and dept. designed rules

do-not-contact request

add to DNC list

customer offer by channel

Direct mail Print



order management

none (batch input)

do-not-contact request

add to DNC list

customer offer by channel


phone agent

order management

none (batch input)

do-not-contact request

add to DNC list

customer offer by channel









Offer code, order info, product, survey, real- time enhancement, “likely-to-buy-x zip code” model, Predictive Model set, credit card authorization, customer history, pay method,


high attrition risk

retain, reduce cost

credit card, reject order, alternate offer

low attrition risk

up-sell, loyalty

up-sell offer, survey, mGm, sample

credit auth reject


request other card or check

exclusion list?

back order


offer alternative, notify

notify, offer alterna- tive, offer consolation gift

(same as above)



send info, alternate offer, catalog, sample

new offer, catalog, third-party offer, newsletter, event notices

offer code, geography, real time calculation

high potential


find contact preference

new offer?

low potential

reduce cost

exclusion list

(same as above)

(same as above)

(same as above)

none (batch process)

outbound contacts

(same as above)

(same as above)

(same as above)

meet objections, accept order, send literature

outbound contacts

CxC Matrix Treatment Map Deliverables

• Visualize: Advertising, Brand exposures, advertising campaigns, interdepartmental customer messaging

• Analyze: Channel spend allocation, competitor messaging and channel execution, treatment execution turnaround time, execu- tion and measurement systems, internal versus third party capabilities, creative vs. offer vs. list vs. channel, cost benefit of continuous treatment optimization

• Monetize: media spend, channel spend, brand impact, commu- nication design, agency tactics, margin lift, contact technology enhancements, market segments.

• Prioritize: Media, contact points, message combinations

• Optimize: Media spend, agency spend, offer execution, cam- paigns, sales, service and marketing initiatives

Marketing Performance Measurement

In an era when marketers are increasingly asked to prove the value of their efforts, those who lack a complete view of all customer contacts cannot be sure that they have considered all possibilities when deciding on marketing strategy. They cannot accurately compare the costs and benefits of differ- ent opportunities to be sure they are spending money effectively. The CxC Matrix gives them this view.

Matrix data is purposely designed for automation, predictive analysis, and business simulation. It creates a means and structure for continuous performance improvement and provides a framework for observation and experimentation.

Digitized data generated by customer transactions and interactions, combined with product and service use information, can be used to dra- matically alter business decisions. Given enough parameters, systems can

estimate what an individual customer can do and factor that assessment against what similar customers in similar situations did. This makes cus- tomer behavior more predictable and actionable. More importantly, it cre- ates an analytical construct that accelerates company learning and reduces discovery time. Capturing this complexity requires a disciplined mapping process. The CxC Matrix starts with the set of contact points available to your company based on how it advertises, sells, delivers, and services its products. Although large, this data set is finite.

Automate what works—Continuous and Automatic Selling

With multiple sales, service, and communications programs running, cus- tomers responding through multiple channels (phone, in-store, and website), and customers at various stages of purchase, there is too much information for any person or department to manage. By the time a marketing man- ager examines the results of any aspect of the program in detail, tens of other programs have been launched, and thousands of contacts have been spawned across multiple channels.


very high



Figure 12.7 Relative Need for Automated Rules

Decision volume

low high

Decision complexity

Continuous and Automatic Selling (CAS), applies proven direct marketing testing and analysis principles to each individual customer contact. It does this by using business rules to determine the elements served to each slot, container and slot, and container combinations.

At its simplest, the CAS constantly tests the current elements versus potential alternative elements until the challenger out-performs the base, “Offer A,” in the example below.

When the “challenger” out-performs the base, the challenger replaces the base, and a new challenger from the “Test” or pending challenger set replaces the “Challenger.”

This practice, while not commonplace, is used extensively on websites that dynamically present offers and content based on a visitor’s (customer’s) profile data (if registered), website navigation path, click stream, geographic location, and any other accessible data.

Companies are using similar methods to dynamically construct emails to customers who identify their preferences and Matrix consumer stage to assemble each email’s contents: messages, offers, colors, graphics, follow-up channels, pricing, contact instructions, and partner offers.

Figure 12.8 Continuous Contact Optimization

Figure 12.9 Making Contacts Manageable and Observable

While early adopters and technically sophisticated companies may seek to quickly optimize every possible contact in each channel at each Matrix stage, this is a very expensive and complex proposition. It is also not likely to be necessary to achieve the majority of the revenue and profits available through optimizing performance in a few strategically selected channels. It is also worth noting that, as evidenced in the following example, additional capital generates higher returns when directed at increasing the frequency and complexity of current offers, products, and messages. This requires more people and more creative service and product offerings. It generates more to talk about and more people to create stories.

Best story wins!

A highly successful company that had experienced a 20 percent annual growth rate for a number of years—primarily due to leveraging web and Internet channels in combination with their traditional channels—found that it needed to expand its staff of copywriters from two or three people per line of business to 20 or 30 per line of business. This was the only way that it could meet the demands of constantly constructing new offers, new messages, and various pricing and marketing techniques.

Did it pay off? Yes. Growth expanded to over 30 percent year over year in a highly competitive market, and some individual lines of business grew profits in excess of 50 percent. Profits grew due to the reduced cycle time in identifying winning programs and reducing the wasted expense of under- performing and failed programs that atrophied in the market.

The high-profit, high-growth company’s CEO, who has an account- ing background, made substantial investments in performance manage- ment systems technology. He empowered his chief technology officer and chief operations officer to invest in systems and processes that provided quick, efficient, and flexible execution of dynamically changing offers and products.

His ultimate success came from their managers with a set of metrics and reports available in near real time and showed the value of nearly every element of each contact. Every manager was encouraged to monitor yield per offer, yield per customer, lifetime customer value, and yield per contact, including cross-sales, up-sells, and referrals. Sales by customer were also monitored but, more importantly, were valued for their internal cross-sell potential.

His mantra was, “Best Story Wins,” and he set up a customer infrastruc- ture capable of identifying, which stories were best performing. He provided managers with the tools to continuously manufacture, monitor, test, and execute the “best stories,” sales propositions, and customer experiences in their chosen markets.

Marketing Performance CxC Matrix deliverables

• Visualize: Brand impressions, competitors messaging strategy; messaging flow for new versus existing customers' marketing; sales, communications strategies; geographic/competitor specific messaging strategy; communications plan; product lifecycle; consumer lifecycle; innovation vulnerability; style book.

• Analyze: Potential customer revenue by life stage; customer profitability ranges per contact combinations; customer value performance algorithm; market simulation; promotion simula- tion; market disruption simulation; merger and acquisitions, new market entry; product launch; product/service discontinuation; management hypothetical simulations; war room analysis.

• Monetize: Customer data elements, process and resource attri- butes, mergers and acquisitions, new market potential, price change impact, service alternatives, market components, com- petitors and partners pricing, distribution, and profitability.

• Prioritize: Performance outliers that indicate high business risk and untapped revenue potential; keystone consumer cycle events and tactics; markets, products, customers.

• Optimize: Customer potential algorithm performance; slot and contact component combinations; market observation data and criteria; decisioning cycle time support; and tools for all manage- ment.

How you can use the CxC Matrix today

Your company’s version of the CxC Matrix, channels by customer stage, should be clear in every decision-maker’s mind and readily available at every manager’s disposal to depict how any business decision will affect custom- ers and potential upstream and downstream corporate impacts. How and where does this decision impact customers? How many customers of which segments will be affected? Which channels are best suited to introduce an offer, change, or announcement to customers?

The CxC Matrix is meant to depict the obvious but often overlooked chan- nels and vehicles for conveying messages to customers. The same Matrix

that was used at the planning stage can be used post decision to assess the accuracy of the assumptions made at the time of the decision.

A simple Matrix should become part of managers’ project proposals to delineate the anticipated impact on customers by life stage and contact point. Will the proposed project grow customer flow? Reduce customer flow to specific contact points? Grow or reduce revenue and costs at specific contact points?

Ongoing Matrix uses

Most companies have reporting capabilities whereby they can create stan- dard management reports using the CxC Matrix design and principles, reporting on customer flow and customer value across departments and systems on a quarterly, monthly, daily, or near term basis.

The Matrix is designed to provide an enterprise view of customer perfor- mance and as such is often fed data from a number of disparate internal and external systems. The company’s requirements for level of Matrix detail and the frequency of reporting dictates the amount of design and programming resource required. Department and function specific CxC Matrix reporting and systems can be designed and launched using internal resources or a combination of external resources, hosted reporting services, and any num- ber of hybrid resource configurations.

Advanced CxC Matrix future applications: The customer algorithm

As products and services become smarter and require less direct human intervention, customer contacts, product operation, and messaging will become more automated and programmable. Like Neil’s story at the begin- ning of Customer Worthy, where his town’s recreation commission publishes a message to his car’s dashboard to register his children for spring baseball, messages will seek out customers through the best available channel as

determined by a complex set of rules orchestrated to adapt your company’s objectives to the customer’s preferences, value and context.

In Neil’s situation, his car was parked in a municipal lot and his family car was identified and recognized by its registration and Neil’s digital footprint, which recognized that Neil’s car was capable of and approved for receiving messages from the municipality.

This scenario highlights not only the use of advanced message design and communication technologies connected to customer profile databases and transaction systems, but also device-to-device interactivity where Neil’s phone, laptop, and car are all “aware” and connected to the transaction, with the proximity of his laptop and phone providing sufficient authentication for the bank transaction to complete. Furthermore, the electronic payment transaction initiated when Neil said, “confirm,” is likely captured and veri- fied on the municipality’s systems and executed between Neil’s financial institution and the municipality directly.

Neil’s successful transaction and all the steps in the transaction are also used to help the new system learn the best process route to conduct similar transactions for Neil and people like Neil in the future.

Again, all of the information exchanges, rules, and even the exchange of money and access to Neil’s bank account appeared effortless and mat- ter-of-fact to Neil due to the execution of continuously learning customer algorithms running in the background.

al·go·rithm (āl'gә-rĭth'әm) n. A step-by-step problem-solving procedure, especially an established, recursive computational procedure for solving a problem in a finite number of steps.

The American Heritage Dictionary of the English Language, Fourth Edition, Houghton Mifflin Company, 2004.

The customer algorithm is a customer-centric formula designed to con- figure messages, activities and transactions to ensure customer convenience

and optimum service. In the future, the customer algorithm will be the “rules center” surrounding the customer and working on behalf of the customer to ensure that only customer-worthy messages are allowed access to the customer’s network.

While the customer algorithm governs access to customers on the cus- tomer’s behalf, companies will continue to evolve their own algorithm—the culmination of all of the elements described in the CxC Matrix connecting advertising, sales, marketing, finance, legal, service, and operations.

Figure 12.10

The CxC Matrix Algorithm is the mathematical expression of the probable success of each element in a contact to move the customer to the next con- sumer life stage factored by the customer’s potential to buy anything over a specified period of time. Conversely, the CxC Matrix Algorithm is also used to calculate a customer’s probability of never buying anything or failing to exceed a value threshold over the lifetime of the customer’s relationship.

The elements required to construct this algorithm are available today as described in the CxC Matrix walk-through earlier in the book. Since a great number of contact elements are not yet digitized, the effort and cost

to build and execute the CxC Matrix Algorithm outweighs the near term benefit except in explicitly digital channels like web-based ecommerce. As more messages become digitized and they grow their understanding of cus- tomer processes, customer networks and customer performance companies will move use of the CxC Matrix Algorithm from analytical and simulation modeling applications to real time advertising, sales, service, transaction, and communications applications.

For now, the CxC Matrix Algorithm is particularly useful in depicting customer contact scenarios as simulations to test and estimate the potential value of alternative business strategies, tactics, environmental scenarios, and competitive scenarios.

Leveraging the gaming skills of new work force

The CxC Matrix Algorithm enables companies that have completed a thor- ough CxC Matrix and CxC Matrix Treatment Map to efficiently experiment with alternative strategies and tactics in a manner similar to a role-based video game where multiple parties can collaborate and compete to build best outcome or highest scoring opportunities. Companies can evaluate the costs and benefits of new market entries, new product lines, mergers and acquisitions, and new product and service features from a customer performance perspective.

Customer ignorance is not an option

Companies that lack customer performance knowledge and foresight will (expensively) pursue the wrong customers with the wrong messages deliv- ered at the wrong time through the wrong channels.

Legacy management structures, reporting systems, analytical methods and traditional decision making silos will not survive in this new competi- tive frontier where the best prescribed offers are designed to laser target customer’s specific needs and context while surgically eliminating competi- tion from consideration.

In the current reality where almost any company can quickly replicate another’s products and services and hijack its marketing message and value propositions, you need to ensure your contacts are customer worthy at each point that proves to be critical to growing customer value.

Every employee, partner, stakeholder, shareholder, and market influencer must measure every business decision with the same single criteria: is it customer worthy?