Identifying the right customers

I went to Naples during the weekend and I twittered about some of the things I did. An hour later a restaurant I didn't go to became a follower. I wonder what will they think of my next 1000 posts that will not make any reference to Naples or their businesses. Monitoring my tweets will be a waste of resources for them.

Social networking tools allow us to come closer to our customers, the new information and interactions should provide clues as to how better serve them and increase the revenue coming from them, but along with this increased revenue comes increased service and information mining costs (among others).

The challenge for us is to identify those customers that matter and it is useful to get closer to, for example: customers that represent the bulk of our user base, customers that lead in trends and know where the service should go, repeat customers. Also identify those customers that negatively matter, for example: serial complainer, serial returner or service abuser.

But there is a third category: the useless customer - this may be a one time customer and it is circumstantial that is using your service or product. This category of customer needs to be serviced to the highest standard (to avoid bad word of mouth and because it should be part of the service experience), but you have to be careful about the information gathering and relationship forming. Also, get a lot of misidentified customers like me and you get an skewed vision of your customer base.

When there is no benefit for you to have a relationship, you should not form it. Avoid wasting resources in customers that will not have an effect in your business, concentrate in those that matter.

Thinking traps

I was reading an interesting blog post by Litemind about thinking traps. A lot of them have to do with our natural bias:

• Thinking we are better than we are (overconfidence in our abilities, memory, intuition or gut)
  
• Trying to confirm decisions we already made (shopping for confirmation, protecting our status quo or sunk costs)
  
• Unquestioning our thoughts and assumptions

We can avoid some of the traps by talking to people who hold different points of view. This article reminded me why it is important to have diversity in our teams. Our teams can protect us from some of the traps. There is one trap that is not in the article and that is intrinsic to groups: the "group think" trap. This trap makes the team assume one position or opinion and none others are considered (from wikipedia: groupthink).

To avoid falling into "group think" we have to make sure that dissenting opinions are heard, that timid or softspoken team members get a change to talk, and that critical thinking is always on the table. As a team lead or member, we all share that responsibility. Remember that this trap can make a team behave like lemmings and jump off the cliff.

Going to the moon

Today we are celebrating the 40th anniversary of the US moon walk. This gives us a great opportunity to think about setting challenging goals for our companies, departments and endeavors. If we do not challenge ourselves, the status quo and everyone around us, we will find ourselves in the same spot year after year.

“We can challenge ourselves to do great things again by joining forces, cooperatively, with patience and perseverance, by setting our objectives high and helping other people to join us in the quest for expansion of our thinking, of our capabilities.” – Buzz Aldrin

Note: For those of you who don't know, Buzz Aldrin is the astronaut that piloted the lunar module of NASA’s Apollo 11 who took him and Neil Armstrong to the moon.

Money Management in Times of Crisis

This is the shorthand from a lecture I gave last week for dealing with a personal financial crisis:

When we are facing an economic crisis, there are four issues that we must understand:
1) What the crisis is and entails
2) What are the assets we can use during the crisis
3) What changes we can make to reduce the impact or evade the crisis
4) How to avoid making the crisis worse by taking more debt

There are 8 steps required when dealing with a financial crisis. Three steps we need to take before the crisis, and five we will take during the crisis.

The three steps we take in preparation are:
1) Understand what is our net worth - we need to understand what our assets are and where our obligations stand
2) Understand our operating financial needs - Yes I am talking about a budget
3) Establish an emergency fund - 100% liquid asset

Once the crisis strikes, then we do the following 5 steps. Not really one at a time, but all together as much as possible. The steps are:
1) Keep calm - understand the emergency and develop a plan
2) Find alternative funds - either sell assets or develop an additional income stream
3) Renegotiate our debt - I am talking mortgage, car payments, personal loans and/or any other financial obligation
4) Reduce or eliminate operational and discretionary expending - reducing or eliminating cable, cell phone, internet, Starbucks addiction, etc.
5) Ask for help of friends and relatives - just not more debt. Ask grandparents for help with child care, friends for employee store discounts, etc. Avoid increasing the number of creditors.

The talk was a success.