20 February 2006

WOMBAT Roundup: Don Peppers

From last month's WOMMA Conference in Orlando, a framework that hits home...

Don Peppers, he of the 1-to-1 Marketing fame along with Martha Rogers, made a very effective presentation about their "Return on Customer" metric. Basically, it means measuring the current and lifetime value of your customers and prospects and noting how it changes, sometimes in opposition to shareholder value (the traditional measuring stick).

Acording to Peppers and Rogers, you can have a company gaining shareholder value while dramatically losing customer value. Example: Blockbuster's late fee charges, which accounted at one point for over 30% of profits; good for shareholders, bad for customers and thus bad for Blockbuster's future.

One particular slide made Me bolt upright. Here it is:

Many businesses are in this situation:

-- Reasonably profitable, but no significant growth being achieved with current customers.
-- Short-term results trump every argument.
-- Business units act independently, but wind up "fishing for the same fish in the same pond."
-- Generally declining response rates, but no metric in place to gauge any actual loss of value.
-- Anecdotal evidence that customers and prospective customers feel over-solicited and even harassed.

This is exactly what is happening in Puerto Rico, as a whole. Not just "many businesses," but almost all. And if you extend that thought to government, then it's even more appropriate: barely any growth, knee-jerk thinking, repeated straining of the dwindling middle-class, apathy beyond mere ennui and We are feeling harassed, exploited and even abused.

From an advertising environment that makes "Blade Runner" look normal to sheer pig-headed Foolishness (and as ever, the obligatory apology to pigs everywhere), Don was talking not only about Return on Customer--which We should all take up--but he was also talking about Return on Citizen. If We now target even newborns as customers, it would seem more important to recognize that by maximizing Citizen Value, We can get a better Return on everything, far beyond the basics of money profit.

This isn't some new-fangled idea: the Greeks brought it up almost 3,000 years ago. Forgive Me if this sounds pessimistic, but it may take another 3,000 years before The Fools start using it as something other than a Blarney Stone for lip-service.

The Jenius Has Spoken.

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