A Tribute to My Father

A tribute to the original Collaboration Evangelist

January 1, 2009 by chu (Edit)

On the Monday before Thanksgiving my father, Cecil H. Underwood,  passed away.  The date was November 24th, nineteen days after his 86th birthday and twenty days after Barrack Obama was elected President.   My father was born two days before Election Day in 1922, elected the youngest Governor of West Virginia two days after he turned 34 and elected the state’s oldest Governor on his 74th birthday.  In my post, Why a Collaboration Evangelist, I wrote:

Perhaps it’s a “nature and nurture” thing, as I have always been a strong believer that teams of smart people with diverse backgrounds and points of view will always have a better chance of solving challenging problems and finding new opportunities to add value to any enterprise than the model where “one smart guy solves all the problems and makes all the decisions.”

From the nature side, I was born the day after my father was inaugurated as the 25th governor of the State of West Virginia at the age of 34.  One of the things he told me about that campaign was although they had only one paid staffer – his driver – the campaign was supported by 3000 volunteers. The campaign put all of their efforts into organizing and energizing their volunteer network to register and get supporters to the polls.  They spent the money they raised on the new technology of the day called TV advertising.  This strategy enabled him to become the first Republican governor in 25 years in a state where Democratic voters outnumbered Republicans   by 2.5 to 1.

The many papers around the world that carried the news of my father’s death described him as “a high school teacher who became a governor.”  While it is true that he started his career as a high school biology teacher and his last formal employment was as a Drinko Scholar at Marshall University, my father was always quietly teaching through his actions to those of us who had the good fortune to know and work with him. At his memorial service, I remembered my father by sharing some of the lessons he taught us by the way he lived and the way he led.  These included:

1. No obstacle is too high to overcome if you believe in yourself and are willing to work very hard to achieve your goals.

1956 Campaigning for Governor at 33 Years Old

My father took on monumental challenges from the beginning of his career.  At the age of 22, he challenged a long standing incumbent to win the first of six terms to the State Legislature.  Twelve years later he was elected Governor.  But at the end of his first term he lost a race for the US Senate (at that time, Governors could not run for re-election) and over the next 36 years he ran unsuccessfully for Governor three times.

During this period, I remember thinking that maybe my father had “peaked too soon” at the age of 34, like an NBA team playing their best ball before the playoffs.   He showed me otherwise in 1996 when he was elected the State’s 32nd Governor.  During his second administration, more jobs were created, more roads were built and more school children and seniors were connected to the internet than during any other four year period in the history of West Virginia.

As I admired his work ethic and the successes of his second term, I thought he was the greatest role model for working hard and beating the odds that anyone could ever have.  But again I was wrong. Not wrong in the role model, but wrong in the act.

The most amazing thing I saw my father do was to come back from a paralyzing stroke he suffered in 2006 at the age of 83.  The entire left side of his body was paralyzed with the exception of his fingers, which he could move slightly if he wasn’t too tired.  At his discharge planning meeting a few months later, my sisters and I told Dad he needed to move to an assisted living facility to continue his rehabilitation.  He was none too happy with our proclamation and wanted to know what he had to do to live at home again. We told him he needed to be able to walk.

So, for the next three months, he did 5 hours of physical therapy a day – riding the stationary bike, lifting weights and doing anything else the PT staff at Charleston Gardens told him to do.  His efforts were rewarded as he indeed did walk again and was selected “Stroke Recovery Patient of the Year.” More importantly, he was able to return home for several years.

2. Always help others in need.

During the Christmas Holidays of 1995, as he was contemplating running for governor, my father mentioned his desire to use the Governor’s office to encourage all of the religions and faiths of West Virginia to work together to promote job training and healthy living.  Although I knew this was very important to him, I never heard him mentioned it during the campaign.

Then, during the first event of his inaugural weekend, a Multi-denominational Prayer Service, he called for the creation of Mission West Virginia, a non-profit that recently celebrated its 10th anniversary and has helped thousands of low income residents find jobs and improve their quality of life. I remember sitting next to Bill Phillips, his longtime friend and campaign manager and whispering, “Did you know he was going to do this?” “No,” Bill replied, “Did you?”

Inherent in all of these lessons is an overarching one our father taught us by example – “Actions speak louder than words.”  A few years later, we realized that my father had already put into action the true meaning of being a “compassionate conservative” by launching one of the first “faith based” initiatives.

3. Don’t judge others.  See the value in all people.  People who disagree with you do not always need to be your enemies.

To my father, there were no people better or more important than others. He was as comfortable with Presidents, Governors and CEO’s as he was with farmers and construction workers.  He abhorred racism, sexism, classism and all of the other “ism’s.”  He was proud of the birth heritage of West Virginia as the only state formed by succeeding from another state in opposition to slavery.

Before the term was popularized, my father understood the meaning of “multiple kinds of intelligence” and he saw the goodness and value in all human beings, regardless of their titles, the money in their bank accounts or their years of formal education.  He didn’t judge others.

He taught us that political opponents do not have to be personal enemies.

I remember having a conversation with a Democratic member of the Legislature years ago who told me, “I really enjoyed being in the House with your father, because we could argue about policy and call each other SOB’s all day long, but remain friends and still have a drink together at the end of the day.  We could do this because we knew we shared a common desire to help the people of West Virginia, even if we disagreed about the best way to do so.”

His ability to rise above partisan politics in service to his beloved state was evident in the many commissions he served on and causes he championed when out of office.  Whenever asked to help the state in any way by any governor, regardless of party or previous races, my father always stepped up to help promote a bond issue, or raise money for a special project or lend a hand in some other way.

4. Don’t try to do everything yourself.  Ask for help and work together with others to get things done.

My father’s chosen professions of politics, government, business and educational leadership all share one thing in common.  These are professions where you cannot do everything by yourself.  Indeed, 100% of your success comes from working with and through others.

As I mentioned in my earlier post, my father loved to tell people that in his first campaign, he had “one paid staffer and 3,000 volunteers.”

And before the ability to “reach across the aisle” became a political slogan, my father worked with members of the Democratic Legislature in both terms to develop and implement programs and initiatives to help those in need and move the state forward.

5. Never stop learning, innovating and looking to the technology of the future for answers.

When students ask me what’s the most important key to entrepreneurial success, I tell them “creative perseverance.” I learned this not from reading the biographies of successful for-profit entrepreneurs,

5. Never stop learning, innovating and looking to the technology of the future for answers.

1996 Election Night and 74th Birthday

When students ask me what’s the most important key to entrepreneurial success, I tell them “creative perseverance.” I learned this not from reading the biographies of successful for-profit entrepreneurs or my own experience, but from watching my father.  He taught me this through his hard work and determination and by never giving up, but also by always trying again with something new.  He taught us to “try, try again” but he also taught us to not try the same way over and over again.

During those Christmas Holidays in 1995, my father and I were reading Bill Gates book, The Road Ahead.  It dawned on me that if he decided to run, my father could be the Governor that brought the interstate highway system to West Virginia during his first term and the Governor who brought the information superhighway to West Virginia. I knew my father had a vision of using technology to bring employment, educational and health care opportunities to the people of his rural state.  We bought the web site address governor.com, built one of the first political web sites ever used and his advertising agency, Charles Ryan & Associates came up with the slogan, “A Leader for New Times.”

What I didn’t realize at the time was that embracing technology and looking to the future for answers was nothing new for Cecil Underwood.  Only years later, reading John Morgan’s book, West Virginia Governors, did I learn that my father proposed a plan for the gasification of coal through the use of nuclear energy in October of 1960.  My father was an innovator and – although he would not have used this word – a futurist. One of the programs he proposed in the 2000 campaign was to bridge the digital divide by giving low income families free access to the internet and re-built computers donated from government and business.  This proposal mirrors exactly the work of the innovative nonprofit Computers for Youth and the 2008 presidential proposals of the group the Personal Democracy Forum.

My father grew up in a home with lots of love, but without the modern conveniences of central heating, running water or electricity. Instead they used wood burning stoves for heat, a well for water and oil lamps to read and study at night.  His first job off the farm was as the janitor of his one room school house at the age of 12.  But by the time he left this earth, he was using a laptop with a high speed internet connection and championing the investment in and use of technology to help those born in similar circumstances.  And he never stopped collaborating with others to make things happen.

So, the next time you are faced with a major challenge, remember the lessons Cecil Underwood taught us over 86 years of living and leading.

Don’t abuse your best customers Part II: Hertz #1 Club Case Study

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My first job out of business school was with Bain & Company consulting.  I spent six years at Bain and during that period and my longest non-travel period was two weeks. One of the first things I did after starting at Bain was to join every frequent flyer program and several hotel rewards programs. Although I do not remember the exact date, I also joined the Hertz #1 Club as soon as it was launched.

One of the greatest benefits of the Hertz #1 Club is you can usually avoid standing in line at the rental counter and proceed directly to the lot where your car is waiting for you.  Although I perceive Hertz to be more expensive than Budget or Alamo, I made the mental value calculation that the ease of reserving (call the 800 # 1 number) and picking up the car is worth whatever premium I may be paying.  I have also been able to rent some great vehicles recently, notably the Ford Edge on my frequent trips to Pittsburgh.

Last weekend, I planned to fly from Boston to Pittsburgh, pick up a Hertz car, drive to Morgantown, WV for two days of board meetings, basketball and football games and then on to Charleston to visit my father for a few hours before flying back to Boston via Charlotte.  I was originally planning to start my journey Thursday by flying from Boston to NYC for the OMMA Advertising Networks conference and then to Pittsburgh Thursday night.  But the LGA-PIT flights were canceled Thursday night, so I flew back to Boston and took the Friday morning 6 AM BOS-PIT flight.

On the way to the airport in Boston, I remembered I had not changed my car reservation, so I called the Hertz #1 line and re-booked. While on the phone, I remembered seeing a recent Hertz ad claiming that you could “reserve the car you wanted” at many Hertz locations, so I asked about this.  The reservations agent read a list of vehicles available and said I could “request one.”  Although the Edge was not on the list, I selected a Pontiac G8.

When I arrived in Pittsburgh later that morning, I was surprised when the #1 agent told me I would be renting a Honda Accord and not a G8.  No problem, I thought, the new Honda’s look like great vehicles as well.

As I approached space D4 underneath the Pittsburgh airport, I realized the Accord was not the new model, but rather at least one model old.  I was even more surprised to find out that the car smelled like smoke and had cigarette burns on the seats and door fabric.  On the seat next to me was a “Pre-Rental Vehicle Inspection Form,” something I had never seen before in any rental car.  The form noted that there were “dents” and “scratches” on the front, driver and passenger side of the car.  To complete the picture, when I started the Accord the odometer read 34,000 miles, another first in my rental car experience.

So, as an ex-smoker extremely sensitive to the smell of cigarettes, I found myself driving to Morgantown with a raging headache in a smelly car that was out of alignment.  For 20 of the past 27 years (the exception being my time in Canada when I was 100% loyal to Tilden/National, our AIR MILES Sponsor) I have only rented Hertz cars. Hertz has the data to know this, yet they give me a vehicle that is worse than I would expect from the lowest cost car rental company, and charged me $100/day for the experience.  Maybe given my last minute change this was the only vehicle available that could be dropped in Charleston, but if that was the case, they could have and should have apologized in advance.

My next steps:

  1. Check out Avis, National and or Budget “Number 1” Programs
  2. Wait a few days to see if anyone from Hertz is monitoring their customer’s comments on blogs like this.
  3. Try to find Hertz CEO’s email address and see if he/she is interested in responding to this.
  4. Do the same thing with the Hertz board.

Here’s the back of the envelope loyalty math.  Assume I rent 20 vehicles a year for another 20 years at an average price of $50 per rental.  That’s $20,000 in lost revenue from breaking the virtuous cycle of relationship marketing and not using the information Hertz has in its database to treat a valuable customer well.  Hertz blew it at step 1, they know I am a loyal customers and instead of rewarding me with an upgrade or other amenity, the insulted me by giving me a brand damaging vehicle. Let’s see how they attempt to recover, if at all.

Questions:

  • What data do you have on your best customers that you are taking advantage of today?
  • Are there similar examples of “best customer abuse” happening in your company?

Three I Leadership

During the time I was CEO of The Loyalty Group, we grew from three entrepreneurs in a Toronto hotel room to over 600 employees when we sold the business to Alliance Data System (NYSE: ADS).  Throughout this period, I thought a lot about both leadership and how to help people develop the requisite skills to advance as far as they wanted to in their careers.

Nothing gives me greater pleasure that seeing those who worked with me do extremely well.  Two great examples are John Scullion and Brian Sinclair.  In 1993, I had to use all of my selling skills to convince John to leave the high profile corporate travel business Ryder Travel and join a company whose balance sheet looked similar to some now defunct Wall Street firms.  John is now President and COO of Alliance Data Systems, with a market cap of several billion dollars.  Brian Sinclair, whose first job out of college was an AIR MILES analyst is now the Managing Director of Nectar, the wildly successful coalition loyalty program in the UK that recently sold to Aeroplan for $700MM.

After we visited Brian at his London offices last summer, my 12 year old daughter Jordan remarked, “You gave him his first job and now he has a better job than you!”  Although I thought about reminding her that the flexibility of my firm enabled our father daughter trip to London, my wiser side prevailed and I responded, “That’s right, and nothing could make me happier than seeing people I hired doing really well.  That means I hired great people and hopefully they learned a few things from working with me.”

One of the things I came to understand about leadership and developing executive talent became what I call the “Three I’s of Leadership.”  I realized to build a successful high growth company while delivering on our cultural goal of “doing what others consider the impossible, while treating people with respect and having fun along the way” we needed leaders with the following skills:

  • Intellectual Leadership – Leaders who had both the raw brain power to identify opportunities and solve challenges and very deep skills in their specific areas of expertise.
  • Implementational Leadership – Leaders who were not just “consulting smart.” Executives who could actually stop thinking, developing models and drawing matricies and “land the helicopter, get the troops in the field and make things happen.”
  • Inspirational Leadership – Leaders who could get things done without making everyone quit.

Over time, I found out two things about this model:

Three I Leadership can be, and usually is, a shared set of skills. Although no senior executive can have below threshold skills in any of the areas, many highly successful companies are lead by “Three I Leadership Teams.”  I first realized this through being involved in YPO (the Young President’s Organization) where I spend a lot of time with other Presidents of successful companies. My original belief was that successful CEO’s had to be “A” players in all three leadership skill sets, but I observed several who clearly were not what anyone would consider “motivate the troops inspirational” and others who although incredibly smart “idea machines,” needed someone to keep them from trying to implement every idea as soon as it burst into their heads.  All I observed were very smart, but not all would qualify for Mensa.

I soon realized that almost everyone had built a “Three I Team” around themselves by hiring direct reports that balanced and complimented their skill sets. There was the collaboration principle at work again.  Once I realized the importance of Three I Teams (and the stupidity of expecting every senior executive to be naturally gifted at all three), I started using the model to help my direct reports work on their weakest areas and to make sure we had Three I Teams leading all of our major groups and strategic initiatives.

I later began using the Three I model in recruiting and would ask candidates to distribute 100 points across the Three I’s to indicate their leadership strengths and weaknesses. One of the funniest reactions I received to this question came from an executive who had worked at American Express during the 90’s when Harvey Golub was CEO.  He responded something like, “That’s a great model.  Harvey is 60 intellectual, 40 implementational and 0 inspirational.” Then he became even more excited and said, “No, that’s not correct, he is 60 intellectual, 60 implementational and negative 20 inspirational.”  Although the candidate was clearly exaggerating in jest, he was making my point exactly as Ken Chenault was Gulob’s number two at the time. Then and now, there may not be a better example of a “High I Inspirational” leader than Ken.

The model can apply to the leadership teams of organizations large and small. I recently thought about this regarding little league baseball coaches.  A coach needs to know the game of baseball, the complex rules, how to catch, hit, run and steal bases, etc.  But knowing how to play baseball is necessary, but insufficient. Someone on the coaching staff needs to know how to teach young kids how to play baseball – how to learn the game and improve their skills. What drills are most effective in practice; how to spot a batting stance off balance or throwing motion without follow-through and how to make the subtle changes to correct these errors.  Finally, as all sports are partly mind games, and baseball can be incredibly stressful for young athletes, at least one of the coaches has to be able to keep the kids fired up and have a vast vocabulary of positive things to say no matter what happens at the plate!

If this model makes sense to you, try it inside your own organization.  If it applies, consider building it into your professional development systems and recruiting strategies.  Collaborate by letting me know if it worked and what you have done to build upon it.

Extraordinary customer service mitigates disastrous start to long weekend

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Last Friday I left Harvard Square early with plans to get a jump on the traffic to New Hampshire with my 9 year old son Myles and “5 going on 2” yellow lab Ginger. We left Brookline a little behind schedule around 4pm and by the time we reached Storrow Drive, the East Bound lane was backed up.  So, we opted to go West and pick up the Mass Pike in Alston. The ramp was narrowed due to construction and I bumped into the curb, thinking, “thank God that didn’t pop my tire.” Devine intervention was either non-existent or ephemeral as a few minutes later we were entering the ramp to the Mass Pike and it was clear I had a flat.

Fortunately, I was able to pull over in a safe place and started digging in the glove box for the owner’s manual to my beloved X3. As I sat up, I noticed a Massachusetts State Trooper pulling up behind me. ( In all candor, that did cause me to break a bead as a few years ago I collected 3 tickets within 6 months which satisfied the admissions criteria for 8 hours of driving safety school.) But this interaction ended up being a very different and pleasant experience. In hindsight, I assume that someone in the toll both called the Trooper.

Trooper Danny Jefferson was incredibly helpful as he got out of his car and told Myles and I he had already called someone to help. He offered to help me get the “donut” spare tire out of the back of the car, but suggested I wait for the Mass Pike emergency service vehicle who would have a much better/safer/easier jack to lift the car. Within a few minutes, Anthony Pellegrine arrived in his bright yellow truck with the aforementioned superjack and we were back on the road in less than 30 minutes from pulling over.

The “donut” was clearly labeled as a temporary device, with large letters warning not to drive over 50 miles per hour. As the main event for the weekend included traveling over the Sandwich Road from Waterville Valley to the Sandwich, NH Fair – a dirt and gravel road that is so rough it is closed in the winter (but incredibly beautiful; see my photos on smugmug) – I knew we had to make an additional stop to repair or replace the blown tire. Fortunately, we were only one exit away from Direct Tire’s Watertown facility and I called ahead while waiting for Anthony’s arrival.  Susan assured me that they would be ready when I arrived, even if they had to stay after closing time.  Direct Tire is one of my all time favorite businesses and owner Barry Steinberg a leading implementer of all we learned about customer loyalty at Bain; he has been featured in numerous business articles, including Inc Magazines 26 Most Fascinating Entrepreneurs.

By the time Myles and I arrived at Direct Tire, they had a bay open for us and were waiting with a new high performance snow tire to replace the blown one. They welcomed Myles, Ginger and I into their waiting room and we were on our way within 30 minutes. Susan and her colleagues even told us a way to avoid the Mass Pike and most of the 128 North traffic by taking the local’s short cuts.

So here’s what happened:

– Great customer service turned what could have been a disastrous start of a long weekend into an incredibly positive experience; one which I have shared and will continue to share many many times over
– My son got to meet some really nice people who are great at their jobs and deliver extraordinary service
– I found positive content for my first customer service blog; a goal I had from the initial idea of including Customer Service as a major Collaboration Evangelist category.

Total elapsed time for all of this: less than 60 minutes and we were on our way.

Thanks to Trooper Jefferson, Anthony, Barry and the pit crew at Direct Tire and a special shout out to the Mylesman who was hugely patient and kept reading his favorite book Bone throughout the episode.

If extraordinary customer service can turn something as bad as a flat tire into an experience worthy of sharing with others, how many opportunities did your business capture or miss today that could have done the same?

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The 4 R’s

When two former Bain consultants and one recently minted Harvard MBA started AIR MILES Canada, we knew a lot about the economics of customer loyalty and how to quickly understand and model the profit drivers of almost any business. We also knew almost nothing about database marketing other than a few buzzwords one of us picked up from a girlfriend who had launched several magazines.

One thing we felt we did know for certain was that if we could build a broad based coalition of leading Canadian companies who committed to market the program to their customers, we would have the opportunity to create and utilize one of the world’s best marketing databases. All of our friends got that as well; and every one of them thought we would “make a ton of money selling the database.” What they didn’t get was our founding principal of not selling the “list” to businesses outside of the Sponsor coalition (i.e. the companies who paid for the points). We believed we could create the future of database marketing (although we didn’t have a clue as to how we were going to do that), but only if we developed a relationship with our Collectors built on trust.

Before long, we began to talk about the 4 R’s of Relationship Marketing and sketching this diagram on napkins and tablecloths around Toronto, Montreal and Calgary:

The 4 R's

We described our thinking about building relationships like this:

  1. If we recognized that when people showed their AIR MILES card at a retail Sponsor we were rewarding them for both their loyalty to the Sponsor’s business and the fact that they were sharing information with our company (by purchasing the good or service and identifying themselves as an AIR MILES Collector, they were telling us when and where they made the purchase, if they were responding to a targeted offer or coalition promotion, etc.), and…
  2. If we respected the information Collectors shared with us – including demographic and shopping intention information millions shared with us through surveys in return for bonus miles – and didn’t sell or give that information to anyone outside of the AIR MILES coalition (and not even other Sponsors if so requested), and…
  3. If we used the information to present relevant offers to Collectors based on their shopping habits, needs and interests (if a Collector was turned down for an AIR MILES Mastercard, we wouldn’t send them additional bonus offers to apply for one; if we knew there were only guys living in a household, we wouldn’t send them offers for a woman’s magazines; no car, no Goodyear offers, etc.), then…
  4. We would create higher open, read and respond rates to both our basic offers as well as our targeted specific offers and bonuses, which would – in turn – give us the opportunity to continue to reward both loyalty and the sharing of information.

If you think about this simple model, it doesn’t just apply to relationship marketing, but also to basic human relationships as well. If you begin to develop a relationship with someone and share something personal and confidential with them, that relationship will be short lived if they share it with others or otherwise don’t respect your confidence.  We tend to develop relationships with people we have at least something in common with – some point of relevance – be it kids, snowboarding or web 2.0. If these 2 elements are present, the potential for a relationship exits; without them, one probably won’t develop.

The 4R’sl, along with a lot of other parts of the AIR MILES model, appears to have worked fairly well as the program now has over 70% (that’s 9 million) Canadian households as members. More pointedly, while I was CEO, we had open rates for our (snail mail) direct marketing programs of over 70%. Although AIR MILES doesn’t share specific data on email response rates, my understanding is the company still enjoys high open and click through rates for their email marketing programs.

Which brings me to Facebook, Amazon and Eons. Like Jeremiah and many others, I was amused to be served up a banner ad on Facebook last spring for “Thirty Plus and Single” when on the same page I clearly listed my status as “married.”

Facebook was clearly not getting the relevance part and I don’t need to go into all of the respect angles violated by Beacon. Business Week had a good article on the social networking sites’ challenges with developing advertising.

Like many, I use a separate email account for marketing emails. Last week, as I was cleaning them out, I found 2 other examples of online businesses not getting the 4 R’s from Eons and Amazon.

John Della Volpe, the founder of SocialSphere, always thought one of the challenges facing Eons was that many people over 50 aren’t really excited about standing up and telling everyone, or joining a social network for those over the hill. Do people really like to say, “Hey, I’m old?” Partially because I’m in the business, partially because I know Jeff through our work with Year Up, and partially because I was eligible (even before they lowered the age threshold) I joined Eons. But I never really got the value proposition. At least AARP’s mailings tell you right up front about discounts and other offers they bring. Not terribly hip, but getting a deal on anything will always be relevant to me.

So imagine how jazzed I was to open an email only to be greeted with an offer to “get pictures of your grandkids” or something like that. Surely, they have some way of knowing I am probably a couple of decades away from being a granddad. Not relevant and not the kind of email someone like me would open again.

Then Amazon, who has many features I dearly love and admire (Amazon prime may be the world’s best loyalty program – more on that in a future post) sends me an email with a recommendation to buy a case for the flip video I recently purchased.

So what’s wrong with that? Take a look at the user ratings – 2 STARS! This one stood out to me because I had already checked out the product and knew it was a dud. Amazon served up the “people who bought this product also looked at these” content when I was purchasing the flip. After seeing the 2 stars and reading a couple of reviews (e.g. “This pouch is really cheaply made, hard to use, and not worth the money at all”), I didn’t bite.

Back to our core principle – building a relationship requires a foundation of trust. As John Lederer, the longtime leader of Loblaws supermarkets often said, “the consumer has given us their trust to select products for them to be available in our stores.” Although Amazon sells many products through third party retailers and clearly lets you know they are not being sold by amazon.com, it’s one thing to sell products you have little control over and another thing completely to send an email to a highly active customer recommending a product other customers have given a 2-star rating. I have come to trust that Amazon will offer great products and extraordinary service. I have been less enamored with their recommendations and – given this latest example – am even less likely to look at their recommendations or open their emails.

The more time I spend in this space, the more I realize that on-line community builders and advertisers can learn a lot from those of us that also spent time in the traditional direct mail and loyalty space. In true web 2.0 fashion, combining the best of both models will create the most effective strategies.

Why Customer Service?

I have been a passionate advocate for investing in customer service and leveraging the knowledge and insights of front line employees and customer service representatives for my entire business career. This passion comes from several experiences:

  1. As a consultant at Bain & Company,
  2. As the Founder and CEO for eight years of The Loyalty Group, which created the AIR MILES Reward Program, and
  3. As a consumer who all too often experiences bad customer service, but who also takes the time to recognize and reward extraordinary service.

I was a consultant/manager/partner at Bain & Company from 1984-1990. In addition to the requisite cost reduction and strategy cases, a lot of my work focused on two areas:

  • Understanding customers’ most important buying criteria and measuring their assessment of the performance of our client’s and competitors’ products for each criteria.
  • Analysing the economic impact of increasing customer loyalty (I was fortunate to be at Bain when Fred Reichheld was doing the work that lead to his first book, The Loyalty Effect).

Whenever we started working with a new client, I spent the requisite time with C-level executives to make sure we understood their view of the company’s business models, strategic challenges and opportunities. Then, as soon as I could, I would get to the front line employees who were making the products on the shop floor or answering the phones in the call centers or dealing on the front lines of a retail chain. I knew these employees would be not only a great source of data to help identify the company’s challenges and their root causes, but also a rich vein of ideas for addressing these issues and identifying new opportunities. At many clients, they were also dying to offer their insights and ideas because no one from the C-Level group ever asked them.

At the time, I always thought it was odd that a client would pay me to get ideas from their employees instead of doing it themselves, but I was glad to have the income from doing so! I vowed that when I had my own business (or was a CEO), I would find a way to be constantly seeking out the insights, ideas and advice and counsel of those on the front line. As CEO of the Loyalty Group, I had the chance to keep my promise and the last Friday of every month asked five customer service representative to join me in a conference room for pizza and soda. I asked them four questions:

  1. What do you like best about working at Loyalty?
  2. If you had a magic wand, and could change one thing about the AIR MILES program that would increase the program’s value to our Collectors, what would it be?
  3. If you had a magic wand, and could change one thing about the company that would make it a better and more energizing place to work, what would it be?
  4. What else do I need to know?

I led The Loyalty Group for almost nine years and only missed three monthly CSR lunches. I did everything I could do to make these meetings for two reasons:

1) No matter how busy we were dealing with the multiple crises and opportunities that continually rise up at a fast growth start-up, I always returned to my office after a CSR lunch new ideas and insights.  I never doubted that the 90 minutes with these front line employees was a great use of my time.

2) I also wanted to re-inforce to our CSR’s how important they were to our business success. I believe front line employees can make or break most businesses, but in a points based coalition loyalty program like AIR MILES, they are even more critical. Service is more important in this business model for at least two reasons: (a) AIR MILES does not control the interaction at the point of sale when a Collector needs to pull out their card to earn points on a purchase; we could influence that interaction, but those front line employees worked for the Sponsor and not Loyalty, (b) Collectors only called our service center for one of three reasons: to join, because they had a question or a problem, or to redeem their points for a reward. These are business critical moments of truth, particularly the redemption call. We knew that if our Collectors had a bad experience redeeming the points they had spent months or years collecting, they would stop shopping at our Sponsors and the virtuous cycle of Collector Value to Sponsor Value to Shareholder Value would come to an end. The customer touch point that we controlled had to be a very positive experience.

In addition to the monthly lunches, I made sure the CSR offices were always on a higher floor than mine and if at all possible, I walked through the service center on my way into or out of the office. These actions helped me learn the CSR’s names and also made them comfortable telling me if we had a problem or they came up with a new idea.

Finally, as a consumer, I am continually amazed at the poor level of service at many companies and will detail them in posts throughout the year. I will also write about the positive experiences I have including a recent one where extraordinary customer service turned a blown tire into an almost pleasant experience.

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Why Loyalty?

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