Robert M. Donnelly

Robert M. Donnelly
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Robert M. Donnelly is CMO of Flo-Tite Valves & Controls, a U.S. based supplier of valves and components to the process control industry in North America. A coach, educator, and advisor to founders/CEOs of growing firms, he is a serial entrepreneur, having started, grown and sold several technology based businesses. Previously he held executive positions at IBM, Pfizer and Exxon.

Customer Information

Have you ever wondered what happens to all the information the local supermarket collects when they scan your personal information tag on your key chain when you check out? 

Obviously they know what you bought in great detail, the day and time you shopped, how much you spent, and how much profit they earned on your visit, and they have been collecting that information for as long as
 
you have been shopping at that market. As a matter of fact they have collected enough information on your food preferences to create a very accurate profile of you. 

What happens to all that wonderful information about you? Has the supermarket ever communicated with you?

Does it seem as if anyone in management at the supermarket is interested in your level of satisfaction? Or, even seems to care that you were there? 

Business is about customers. The more you know about your customers the better you are able to serve them, communicate with them and build a relationship. In reality growing the value of every customer should be every CEO's primary goal.

Today, through the advances in information technology we are able to collect, summarize and profile customers in a way never before possible. Many firms have lots of information about their customers, but the question is do they use it effectively? 

What if the supermarket was able to motivate you to take advantage of special promotions that saved you money and increased their profit on your next visit based upon their knowledge of your product preferences? They have the information to do that, but have you ever heard from them directly? Probably not. 

Information is available instantly today. Walmart knows what is selling every second and obviously they use that information very effectively. 

Customers change and those changes are reflected in their product preferences. This information on changing customer behavior is critical for any business. If you don't have a way of quickly seeing these changes you will probably be surprised somewhere down the line.  

Customers are different. Segmenting customers into  groups with common preferences has been the marketing 101 approach historically. However, today we have moved on to 1-to-1 marketing where we can communicate directly with individual customers. Now each customer has value to us and their individual preferences have significant profit implications. 

Information about individual customers like what is collected by the supermarket is the primary tool for building the value of individual customers and creating a sustainable competitive advantage or position in the mind of each customer. This information should be available across the company and anyone who interacts with a customer should have instantaneous access to that  customer's profile.

Well there are some supermarkets that are becoming more customer and IT savvy. Let's take Stop&Shop who has hooked up with PeaPod. This is a shop at home over the internet customer conscious approach whereby customers never have to go to the supermarket and have their groceries delivered to their door, or inside their home; if they prefer. 

It is a 1-to-1 experience at its best - faster, better, cheaper. What is the value added for the customer? Time - shop at home at your convenience - no driving, parking, pushing and loading the shopping cart, waiting in line to check out, packing, loading the car, driving back, lugging bags into the house and unloading. The order comes neatly packed and organized, even with cold foods together, and delivered at a time that is convenient for you. 

Some of the other customer conscious benefits are that you can specify when you want your order delivered. If you want it the next morning order before 4 pm and if you want it delivered the next afternoon/evening then you need to place your order before midnight. 

Prices are guaranteed for delivery within 7 days. Delivery is free if you order $100 worth of groceries or more.

If you select an off-hour delivery period you can get a discount. You can use coupons online or give them to the delivery person to be deducted from your next order. Your orders can be linked to Upromise to get credit for college tuition for your children. You can update your order after it has been placed. 

You even get coupons or reminders if there is a sale on items that you have purchased in the past. Now that is keeping track of and using customer information. 

You have your own customized shopping list based upon past purchases called Your List or Express Shop that makes your shopping so much easier because it has a profile of your historic purchases. Eighty percent of what we buy every week at the supermarket is the same 80% we bought the week before. 

In addition, they offer Ready to Heat and Ready to Cook meals, party platters, fresh bakery goods and even a selection of Boston Market items. 

Now isn't this a "delight" to any time sensitive harried supermarket shopper. It's certainly faster, it's cheaper when you calculate all the tangible and intangible costs of your existing supermarket shopping experience, and its better because of the overall convenience of the process. In addition, they are "using" the information they are accumulating on your product preferences to save them and you money.

Most PeaPod users will never see the inside of a supermarket again. Why should they? 

You can Google anything and get more information instantly than you can deal with most of the time. I guess the question is - can you get information on your customers in as much detail and as quickly? 

Are you using all the information you have on your customers effectively?  

Let's start a dialogue on how to use the data you have on your customers to build a better customer information system for your business. Email me at: rmdonnelly@chiefexecutive.net

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.


He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  E Mail Bob at: rmdonnelly@chiefexecutive.net  

Customer Relationship Marketing

A lot of CEO's that I have met and helped over the years thought that they were in the product business. Selling products to customers.

What I got them to understand that helped them refocus was that you are in the customer business. Your business is about finding, satisfying, delighting and growing the value of a customer.

I'd like to share a personal story with you and then move on to some other examples on a larger scale.

For many years I struggled with the car buying experience. Hassling with salesmen over models, options, prices and payment terms, and often leaving the dealership with the uncomfortable feeling that I paid too much for the "great deal" I got. Finally I decided that I would take a new tact and wrote down my exact requirements on an index card.

I walked into a dealership and showed the card to the first salesman that approached me. If he had to study the card for too long, started asking me questions about it, or said that he needed to take it and show it to his manager, I would thank him and leave the dealership immediately. Then one day I walked into a dealership showed the card to the first salesman that approached me who took it, studied it carefully, and asked "what color and when do you want it"? 

I have been buying cars from this dealership ever since. Over the years I have gotten to know all the salesmen and service staff. If I have a problem with my car which I hardly ever do, one phone call gets me an immediate appointment and a loaner car waiting for me if the repair will take more than 30 to 45 minutes.

In addition, if I ever break down within 20 miles of the dealership they send a tow truck and a loaner driven by one of the salesmen so that I can go on my way, even though I have roadside assistance. If I am traveling the same policy holds true for my wife if anything happens to her car.

In combination with a lot of other unexpected delights like complementary mats, customized striping and premium option package upgrades, etc. I am so pleased with the service that I receive that even though I would rather drive another car brand I am not willing to have to reeducate another dealer as to how I like to be treated.

As a result of this customer relationship experience, I have referred friends and colleagues to the dealership. Any referral fees that are offered to me I give back to the salesmen to take their wives out to dinner.  

I have gotten my last seven cars from this dealership and they have sold at least another 15 to 20 from my referrals.

Let's take another great example of perpetually delighting customers - Ralph Lauren and his Polo lines of clothing, fragrances and household products. This master of making the "old" look "new" has been dazzling us with new designs season in - season out, for longer than I can remember now. 

He takes a shirt and adds a lapel, worn look or some other accoutrement and voila it's chic and we have to have it. He has developed such a great value proposition that even all the Polo outlet shops are mobbed almost every day, too.

By using great styling and clever marketing he has endeared customers to his brand. This concept of developing an emotional bond with your brand so that customers are willing to pay a premium price is the ultimate in customer relationship marketing.

This master of "memory marketing" is adept at reinventing and reinterpreting classic designs in a perpetual outpouring of fresh modern products that obviously his customers LOVE !

Just when you think he has exhausted all styles of sports clothing or fragrances he comes out with something new like with the Rugby line of shirts, polo's, sweaters, denim jeans and khakis, jackets, suits, outerwear and accessories. Likewise with his Black Label line of fragrances and after shave lotions and balms.

Other well known examples of CRM are Starbucks and Build-A-Bear, two more firms that are perpetually developing new offerings and modifying existing ones to the delight of their customers.

Build-A-Bear has created an experience for children to create their own personal bear. In essence every product that they sell is one of a kind. In addition they have found a way to connect with kids before, during and after the sale.

As a matter of fact they have sold more than 50 million bears in 10 years. That's a lot of kids and a lot of stuffed bears. Their special kind of "bear buzz" has created a level of customer relationships similar to icons like Apple and Harley-Davidson.

When a customer develops an emotional bond with a brand they typically tell their friends about it. Build-A-Bear kids have so much fun they tell their friends about it and they become customers. It doesn't end there they also develop "cuddly connections" with kids and their parents thru direct mail, e mail and their web site.

Since they collect birthday's of their customers they send "plan a party" reminders to parents 90 days before their child's birthday. They also reach out to perpetuate the relationship with their web site that is full of fun interactive options like "Hug Time" phone calls from Bearemy, the mascot, to a "Build-A-Bearville" online play environment, to Honey-Card e cards that kids can send to their friends.

They also have developed a monthly newsletter that customers can receive by e mail. Maxine Clark, CEO has mastered the art of customer relationship marketing and as she says "kids look at the world differently than their parents and we talk to them every chance we get". Their insights have made Build-A-Bear what it is today.

So the question for you is are you talking to your customers and working to delight them with their experience with your product or service?

Are you getting feedback from your customers, making it easy for them to tell others and keeping in contact with them like Build-A-Bear does?

Have you done a real customer relationship marketing audit at your company?

E-mail me  with questions or issues you have in your business so that we can begin a dialogue to achieve a higher level of CRM in your firm.

 

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.


He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.  E Mail Bob at: rmdonnelly@chiefexecutive.net 

Marketing vs. Selling – What’s the difference?

Creating anything new is exciting. The thought of what a new business might become is exhilarating. The pursuit of that dream is the passion that drives every entrepreneur.

However, this euphoria can quickly turn to chaos. Events can overwhelm the inexperienced start-up team. Many founders have watched as their great technology slipped through their hands and was exploited by others who knew better how to manage, plan and execute a marketing strategy.

The typical entrepreneur is the greatest salesman in the world. They are selling their solution. They are convinced that there are an unlimited number of customers who need what they have created, and they are going to find them all and "sell" them on their solution. 

Steve Jobs and his partner "Woz" were convinced thirty plus years ago that we all would need a personal computer. If you study Apple's history you will see that their great idea was duplicated and enhanced by others more adept at marketing, who at the time and during the growth phase of the PC into the laptop, usurped Apple's initial leadership position and even to this day dominate the market for PC's and laptop's.

Steve has learned something about marketing over all these years as is evidenced by the iPod,  iPhone, iTunes and the sophisticated line of iMac lap tops. 

What is the difference between Marketing and Selling? Marketing as was defined by Reis and Trout a long time ago in their best selling book "Positioning" as The Battle for the Customers Mind.

So marketing is creating a demand in the customers mind so that they will seek you out. Sales on the other hand is chasing customers and asking for the order.

Another way of thinking about the difference between selling and marketing is the difference between a product and a brand. A product is something that is typically created by a company, made in their factory and placed in stores or given to salesmen to sell. Much like what has been happening for a long time now with the American auto manufacturers. The assumption is that the cars will be sold by their dealers salesmen.

A brand on the other hand is something that exists in the mind. As Reis and Trout said a long time ago "the mind is like a dripping sponge" and the only way something gets in is by replacing something that is already there.  

I have been teaching in my executive briefings and in the MBA level courses I teach on marketing strategy, that the mind is a mental product grid like a gigantic ice cube tray with individual cube spaces that contain information pertaining to specific brands. Some of us can retain information on more than one brand, but typically not for more than three brands.

In addition, I teach that we also have value thresholds for the brands that we buy. For some of what we buy we have quality preferences and for other products we do not. For those with a quality preference we have some brands that we have categorized as having a "unique set of attributes" and for which we have only one Brand preference and no alternatives.

For the others in our quality brand category we have several preferences ranked first, second or third, or however many we can retain. These brands with a quality preference have positions that we have established for them based upon our own personal preferences.

For the products for which we do not have a quality preference, but still use we usually categorize as the "cheapest", another position in our mental product grid.

So as you can see, I suggest that we have brand positions in our mental product grid for three categories (special, quality, cheapest) for all the brands that we buy. If we care about a product category then we seek out brands that are special or have one or more levels of quality perceptions. If we do not care about a product category then we seek out brands that we perceive to be the cheapest.

If you ever want to test this hypothesis just look into your shopping basket the next time you go to the supermarket. I will bet that half of the brands in your basket are well known with clear unique selling propositions and the other half the cheapest brands on the shelf in their category. 

Marketing then is about creating those positions in the mind and the monies spent by marketers to promote and advertise their brands result in what's called "brand equity", or the value resulting from customer preferences for those brands. It is about crafting your unique selling proposition and promoting it perpetually so that it gets into the mind and stays there occupying a "position" in the customers mental product grid. 

Simple examples are to be found in the cars we buy. Certain customers believe that Mercedes Benz has "the best engineered cars in the world". Others with the same socio-economic profile believe that BMW provides the "ultimate driving experience". And, yet others will tell you that Volvo's are the "safest cars on the road".

Obviously, Toyota has also done a great job of marketing with their Camry, Avalon and Lexus brands as many more car customers these days are seeking them out over GM and Ford products.

Think about my concept of the mental product grid and all the products that have established brand positions in your mind.

Are you selling your products or marketing your brands?

Have you clearly defined the unique selling proposition that sets you apart from your competitors in the minds of customers?

My next column will be about the current transitions in marketing to Internet Marketing.

E mail me with questions or comments so that we might begin a dialogue to help you get your business to where you want it to be. I can be reached at rmdonnelly@chiefexecutive.net

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.


He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.

E Mail Bob at: rmdonnelly@chiefexecutive.net

Why Plan?

You would think that anyone starting a business would have a well thought out and written business plan - wouldn't you?

How about someone who has been in business for years - maybe?

But the truth is that many CEOs of growing firms do not have a well done business plan. Some don't even have a good budget. Case in point: Arnie Miller, CEO of Matrix Essentials. When I met Arnie he was running a $220 million business with about 800 employees and no business plan. He was running alright, running just to keep up.

I wrote a seminal article for Inc. Magazine a while ago about one of their Inc. 500 firms entitled "Stop the treadmill - I want to get off." It was about another CEO of a rapidly growing firm who was in danger of losing his business and his family because what he set out to achieve - fast growth - was strangling the life out of him and leaving him no time for his family.

In both these cases, and many more, I was able to get these CEOs to step out of the combat zone and put away their fire extinguishers long enough to focus on the age old questions facing any CEO:

Where are we now?

Where do we want to be?

How are we going to get there?

Without a plan every day is a crisis. What else can it be?

When the only plan you have is to sell more today than yesterday, and when that doesn't happen panic sets in, there is no way you can think clearly. Many CEOs of growing firms that I have met spend more time planning their vacations day-by-day, and sometimes hour-by-hour, than planning for the future growth and profitability of their business.

Planning is anticipating the inevitable, but if you do not know what the inevitable will be you certainly can't plan for it.

Business is a numbers game pure and simple. It's about customers, competitors and your unique selling proposition. Many CEOs I have met cannot clearly articulate what their unique selling proposition is, or in other words what is really different about their product or service than those of their competitors? The fundamental rule of the marketplace is that if you are not offering anything different, even if it's just better customer service, why should customers select your product or service over those of your competitors? For that matter why should they even seek you out?

Isn't that the fundamental problem that American car manufacturers have gotten into? Except for a few niche models there really is nothing unique or different about their cars when compared to their foreign competitors, notably Toyota. Toyota has achieved excellence in the three basic components of perceived customer value: quality, service and price.

Did that happen by chance? No - it was planned.

Planning is the process by which an organization can become what it wants to be. Planning is the identification of what we as a company can do to satisfy the specific requirements of a defined collection of customers better than our competitors. It is our core technology converted into our unique selling proposition for those customer types.

Planning is the identification of a problem that a distinct number of customers have and the packaging of your solution in such a way that it makes it difficult, if not impossible, for your competitors to duplicate for those customers. It is the work required to identify these types of opportunities and the allocation of resources in the form of a strategy to exploit them.

These strategies need to be clearly laid out in a narrative describing in detail who is going to do what with what resources in a specific time frame, and what are the expected profitable outcomes; and how are we going to control and measure progress along the way quarter-by-quarter?

The real purpose and value of planning is to determine what we must accomplish this week, or this month, or this year so that our business will continue to grow profitably over the next years.

Success at planning requires information - information about customers and their changing requirements. If the customer gets to the future before you do, they will leave you behind. I have met many CEOs of growing firms who really do not know their customers as well as they need to. In reality, you are in the customer business.

One of the first questions I ask when I meet the CEO on a new planning assignment is "who is your most profitable customer?" Typically, the response is "you mean who we sell the most to?"

Or, "our most profitable products are?" No, I am interested in which customers buying what mix of products represent your most profitable customers?

Business is about solving problems for customers. The goal should be to delight the customers with solutions to problems before they know they have them. Isn't that what any well managed company does? It is part of their planning process. They are constantly looking for ways to deliver excellent customer satisfaction by modifying their products to keep up with their constantly changing requirements

Isn't that what Toyota has done with the Camry? And now with the Avalon and Lexus? Are you planning for the changing requirements of your customers?

My next column will be on the need for an Advice Squad for CEOs of growing firms like you.

Email me with questions or comments so that we can begin a dialogue to help you to get your business to where you want it to be.

An entrepreneur himself, Bob has spent most of his career involved with starting, growing and selling businesses. Having held managerial positions with IBM, Pfizer and Exxon, he draws upon extensive organizational experience with large and small companies in advising CEOs of growing firms. He is available online to answer questions from Chief Executive readers, as well as offer workshops, tips, books to read and a monthly online column about common issues facing CEOs of growing firms. Bob has been featured in USA TODAY for his work with Inc 500 firms and is associated with NYU's Stern Graduate School of business in their Center for Entrepreneurial Studies where he is a Venture Mentor, Marketing Strategist and Business Plan Reviewer.


He is the author of GUIDEBOOK TO PLANNING - A Common Sense Approach to Building Business Plans for Growing Firms, which has recently been reprinted. He is a past contributor to Chief Executive and one of his articles was featured in The Best of Chief Executive.

E Mail Bob at: rmdonnelly@chiefexecutive.net

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