ROI of Human Capital and Organizational Change Management: My Personal Story

I was working for a company that had found themselves in a situation where they had poor morale. Raises were few, partially because of the economy and as a result, people were working very hard and not feeling appreciated. HR came to me to ask what to do. As an early design-thinker, my reaction was always to ask the “customer.” In this case, the “customer” was our own employees. When I interviewed them, I asked them what they wished they had- essentially what was missing? I found that the answers were very surprising. They didn’t feel appreciated. They didn’t feel they were growing and expanding their skills. They didn’t feel like they had a future or that the future looked bright or that they had a hand in creating that future. Or that they even mattered.

The Root Cause of Employee Dissatisfaction

I found that in the appraisal process, once the employee heard they were not getting raise, they shut down. So pretty, much after the first few minutes of the appraisal, they stopped actively participating. So when it got to the part where they were going through their goals for the next year, they had stopped engaging and were only going through the motions.

Because their future goals and engagement to their jobs and their careers was key to being a top company, I came up with the idea of separating the employee appraisal process from the employee development process. And set out to design an employee development process where employees could examine, through goal setting practices, personal-professional goals that would enhance their skill set and make them more valuable to the company, but also have a personal sense of accomplishment and growth.

The Cost of Low Employee Morale?

The cost? With my team, we estimated about $6M for 60,000 employees. I went to the executive leadership meeting and presented my proposal. There was a lukewarm reception, that is… until I got to the cost. At $6M I was laughed at and told to sit down. That was the longest meeting I have ever been in. I couldn’t wait for it to be over. Trying my best to hold back the tears, I just sat there feeling awful.

I went home that night and I did cry. I had interviewed the “customer” figured out what was missing and proposed the solutions. But what I didn’t do is calculate the return on the investment (ROI.) This was very early in my career and this experience taught me the valuable lesson of creating the business value or business case of whatever it was I wanted to propose. The lesson served me well because once I learned to do this, I always got my funding.

Calculating the Cost of Low Employee Morale and Attrition

So you might be wondering how did I calculate the ROI of employee development? Isn’t that a soft skill or a soft benefit? My grandpa had taught me that any time there is value, there is a financial benefit. You just had to find the numbers. So the next day, after a good night’s sleep, I went o HR and asked them, “How much does it take to hire this type of engineer – a digital signal processing engineer?”

They said, combining the recruiting teams time, traveling to various universities, ads in the local papers, radio advertisements, (This was way before social media) reviewing incoming resumes, having the initial screening calls, and then interviewing with a number of the staff and the hiring managers, getting the engineer a secret clearance, etc… the cost was about $150,000 / engineer.

And then I asked the crowning question, “How many engineers did we lose in the last month?” HR said, “200.” And I saw the ROI. If we had lost just 40 people, then $150,000 x 40 would equal the $6M I was asking for. But in the last 3 months we had lost 200, so the cost of attrition just for 3 months was $150,000 x 200 = $30M.

So with the loss of 200 engineers, if I could retain half of them, 100 engineers, then the cost of attrition would only be $15M.

Calculating the Cost of Employee Attrition

The ROI = Benefit – Cost / Cost x 100 = % Return on the Investment

The benefit is the saving of the $15M in attrition costs. The cost is the cost of the program or $6M.

So to calculate the ROI…

Savings of $15M in attrition – Cost of the employee development program of $6M /Cost of the employee development program x 100

So the calculation looks like this:

$15M – $6M / $6M x 100 = 150 % ROI

The Defining Moment

So after pulling my self together and confident with my calculations, I asked for 5 minutes on the agenda. Of course, they were reluctant to give me any time. I got 2 minutes. So I went in with one slide. The slide with the ROI calculation. I said, “We are spending $30M in attrition and if we pay attention to why people are leaving and create a better culture so people feel that they matter, they are learning and growing and feel apart of something bigger than themselves, we can reduce that attrition. So let me walk you through the calculation….” And I did.

To my surprise, instead of sighs of ridiculousness and grumpiness, there was silence. I had hit upon something that no one had thought about. The cost of attrition. While is at first seemed like a “soft” cost, when it was laid out for them in black and white… even if I was off by 50% – we were still wasting the companies money on having people leave because we weren’t paying attention to what was important to them to feel loyal. Why go through all the time and expense to recruit these amazing people, only to push them away and have them go to our competitors, making our competitors smarter and stronger?

How Does This Story End?

Actually very well. I was given the money to develop the employee development program. I was very surprised to get so many emails and people stopping me in the hallways to tell me how much they appreciated what I had done. I didn’t do it for the accolades. I did it because I truly wanted to create an amazing place to work.

The lesson learned? If there is value to something, even if it feels like it is initially a “soft” cost, there is a way to express it in hard dollars in a way that executives can see change is needed. And this was my first experience in organizational change management!

@drnatalie

VP, Salesforce, Innovation and Transformation Expeditions Center

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Mobile Customer Relationship Management: Mobile is the New CRM

Will The Mobile Device Ever Live Up to It’s Potential? Everyone in mobile commerce has been waiting to see mobile commerce take off. While individuals report it’s the one device they always have with them, the change in mobile commerce and CRM has not grown as fast at most experts expected – at least until now. There is a mobile customer relationship management company that is scaling fast. Intact, it has increased its revenues by 500% since their series A funding of $10M last  year. In addition they have added a new Chief Revenue Officer. The compHelpshift Logoany is call Helpshift. They are the first CRM solution built specifically for mobile applications.

HelpShift Is Adding New Team Members To Help It’s Growth: In addition, Helpshift also announced the appointment of Kevin Grant, seasoned enterprise and mobile executive from AT&T and Boku, as chief revenue officer, to advance Helpshift’s efforts in enterprise sales. Abinash Tripathy, founder and CEO of Helpshift was quoted saying, “I am extremely proud of Helpshift’s success thus far, and am excited about our future. The sky’s the limit and we have big plans for the rest of the year. Our focus is to keep growing the product and our position in the market. We’re thrilled to welcome Kevin to the executive team; his extensive client list and wealth of experience in the mobile space will only increase our current rate of success.”

With the addition of Kevin Grant to the Helpshift roster, the company is poised to continue its rapid growth. Grant’s experience working with Enterprise and Mobile industries will help solidify Helpshift’s customer base and triumphs in the market. Kevin Grant was quoted saying “Helpshift’s approach to mobile CRM is truly revolutionizing the customer service industry. It’s a great opportunity for me to work with such a smart group of leaders and engineers who are changing how merchants think about mobile customer care. I’m enthusiastic about the future of Helpshift, and look forward to helping our clients prioritize an amazing customer experience for their consumers. I love win-wins!

What is Helpshift? Helpshift is an in-app customer engagement platform that enables businesses with mobile apps to improve customer experience, drive higher ratings, and increase retention. Helpshift’s SDK allows companies of any size to have a direct in-app conversation with their customers. To date, Helpshift is installed on more than one billion devices and serves 300+ million mobile customers monthly, resulting in 70 percent faster resolution times. Just two years ago, Helpshift began as a small group of engineers in India and a small sales team in San Francisco. Helpshift now has a team of more than 50 engineers in India, and well-established account management, finance, customer success, sales, and marketing teams in San Francisco.

Why Is Helpshift so Important?  The companies that are making a fortune in the new mobile economy have sewed an exceptional customer experience into the very fabric of their company. Support doesn’t just add value — an exceptional customer experience is the value. But the current support solutions were never intended to support the mobile experience – you can’t pour motor oil into a jet engine and expect it to fly, and CRMs and helpdesks just don’t meet the needs of mobile users. Which is an issue, since there are more apps competing for a brand’s customer’s homescreen every day. The world is moving to mobile and shoving a web view into a native app isn’t good enough. Helpshift wants to offer businesses the ability to provide that unparalleled experience wherever their customers are. Helpshift makes it easy to create that exceptional experience in native mobile apps, transforming customers into the most passionate sales team you could hope for, and loyal for life.
Who Are Some of HelpfShift’s Customers? Helpshift has built applications for Target, DoubleDutch, Clash of Clans, Outlook, Family Guy and Mercari.

What Does Pricing Look Like? Helpshift has everything from the freemium model, with 10,000 users and 1 team members to 300,000 users and 3 team members to custom pricing.

With the mobile device being the one we all carry with us, it makes sense that increasing that customer experience would be key. Looks like Helpshift is out to make that a reality!

@DrNatalie VP and Principal Analyst, Constellation Research

Don’t forget to enter the Super Nova Awards!

 

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Data-Driven Marketing Campaign Optimization

My report is about how CMOs can use big data and analytics to transform marketing decision-making and advance corporate innovation by using big data to optimize your marketing efforts.  The way I went about writing this report was I interviewed both vendors and CMOs to understand where the market place is with respect to actually using marketing automation software / platforms.

 

There is a lot of software that delivers on the promise, unlike 25 years ago when CRM- Marketing, Sales and Customer Service vendors (either point or suites) had the right ideas and desire to provide this type of business impact, but the software really wasn’t not as advanced as the marketing brochureware (sales pitch and slides) was.

 

In addition, from working with CMOs when I was in the agency world and throughout my career, the story has been very similar. Software has the potential to create and drive revenue when it’s attached to the right strategy. Technology without the right strategy just means we do more of the wrong things faster. That’s not such a good idea, though it happens every day.

 

Level Self-Identification Leads to Marketing Transformation

You can’t change what you “don’t know, you don’t know.” In the report, I provide a picture for Marketers so that they can self identify where they are in the various levels of using marketing automation and then to identify what they’d like to be doing. In consulting or advisory work, this is often known as a “gap analysis.” It helps people see the present as well as the possible future state.

 

What we found in the research is that many Marketers learned that the way they were using marketing automation software as at Level 1 &2. They do not realize there’s more they could do. Others found that they have not chosen software that help them advance their Marketing capabilities to Levels 3, 4, and 5. In the report, I describe some ideas on what those other levels are and what it might look like.

 

The Five Levels Seek To Drive Marketers To Become Chief Intelligence And Revenue Officers

In theory, let’s say that Marketing really drove revenue in your company. The idea I’m really aiming for in this report is to provoke CMOs and Marketers to think about becoming chief intelligence and revenue officers.

 

When they are able to show that they can repeatedly and consistently contribute to bottom-line, the senior leadership team will give them respect they want. Long gone will be the days of suffering from what I lovingly call the “Rodney Dangerfield Affect” – i.e., the day of “they just don’t get enough respect” won’t exist anymore. And that would only be a good thing.

 

Because Marketing software has changed over the last 25 years and can deliver on may more of the promises it aspired to, Marketers must also change. But there is a gap in the talent pool of CMO’s and Marketers that understand how to use marketing automation and customer experience platforms to get to Level 4 and Level 5 activity (see the report). And that’s what I really want to see happen and why I wrote the report. It’s time that we use all this big data revolution and new technology and transform old roles into new roles where respect for the contribution is earned and acknowledged.

 

What This Means to You

What may not be obvious is the “so what?” What does this mean to you? Here’s some brain candy to think about, As a CMO or Marketer, you need to:

  • Understand how marketing automation platforms have transformed and how big data plays a larger part in today’s CMO role
  • Know where your personal skill level are as well as those of people in your organization
  • Be able to pick technology that can provide these more advanced capabilities; often times buying technology was the role of IT, now CMOs are responsible for this
  • Understand requirements definition documents, capability lists (features and functions), business case justification along with bottom-line benefits — when it comes to choosing technology
  • Fill the skill sets in your organization so that you are able to truly justify to your senior leadership team why you want a larger budget and new technology.

 

I don’t think you can wait to do this. I think it will only going to get worse, not easier to pick the right technology for today’s CMO and Marketer. Make sure you are prepared by educating yourself on your options and learn how to choose technology so that you can show your contribution to the bottom-line.

 

I’d love to hear from some folks who have mastered some or all of :choosing technology and business justification capabilities”— how you did it! You never know, you might become part of my disruptive case studies library!

@DrNatalie

Skype: drnatalie007 | LinkedIn | Google+

Catch my latest:
• Thoughts at www.DrNatalieNews.com 
• Upcoming book series: “7 Steps To Digital Customer Experience Mastery” (working title)

SAVE THE DATE!
Constellation’s 4th Annual Connected Enterprise 
The Executive Innovation Conference | October 29th-31st 

Half Moon Bay, CA | Ritz Carlton
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The CMO is Dead: CMOs Use Big Data To Become Chief Revenue And Innovation Officers

I know you’ve seen these types of dramatic headlines before: The CMO is dead. But in actuality, the roles in marketing, sales, and customer service that once governed how business “gets done” are shifting. This best practices report, Data-Driven Marketing Campaign Optimization is about how CMOs can use big data and analytics to transform marketing campaign decision-making and advance corporate innovation and revenue.

What’s driving this shift? A great deal of the shift in roles is being driven by technology that is now available. In attending many conferences over the years, especially in the last 2 years, the technology has changed very dramatically and delivers on many of the promises CRM (Marketing, Sales and Service) wanted to deliver on, but just honestly the technology wasn’t there yet via its fullest capabilities to do this.

Now that we have technology that can deliver more than ever before, we have to make sure that people know how to use it and use it well. You can read the rest of this blog post to understand my point of view on this or jump right to a snap shot of the report.

The Report: Data-Driven Marketing Campaign Optimization     The report is about how CMOs can use big data and analytics to transform marketing campaign decision-making and make better decisions about their businesses. It looks at how to ensure you’re using big data to optimize not just your marketing efforts, but your whole company. A few of the juicy tidbits from the report are that it:

  • Contains a 5 level evaluation marketers can use to determine how well they’re incorporating big data into their marketing efforts
  • Reveals how CMOs can use big data to enhance marketing decision-making and advance corporate innovation and revenue (Level 5)
  • Helps marketers contribute value to making the best possible customer experiences and drive higher customer lifetime values
  • Ensures Marketers become an essential member of senior leadership team that is responsible for driving revenue and showing that’s so by using data-driven marketing
  • Addresses the politics, the “not invented here” and the silly finger pointing (that should actually be a while collar crime) that often happens in companies…
Progression of Marketing Decision Making to Innovation and Revenue Creation

Progression of Marketing Decision Making to Innovation and Revenue Creation

CMO‘s Paradigm Shifting To Innovation and Revenue Officers     I know it’s often tough being a Marketer and not getting the credit due. You might find yourself suffering from what I call the Rodney Dangerfield Affect, meaning you don’t get enough respect in your organization. I get it. But let’s put that idea in the past. You can get credit; you just really need to know that there is a new way to do marketing and the tools and platforms are there to support you.

In the past CMOs were charged with top of the funnel activities, driving qualified leads to Sales. It was then Sales job to take the lead and close as many as they could. But just like we know the earth isn’t flat (old paradigm) revenue generation is now not just the mission of Sales (new paradigm). In fact, the CMO role is changing and changing fast. The reason? Because the technology today can show what the Marketer has contributed to the bottom-line. And that’s what you as a Marketer need to know and need to focus on— for your career and for your company.

While there’s lots more to cover in the transition from the old paradigm of Marketing as “top of the funnel” people – to the Chief Information and Revenue Officers— if you are a Marketer who is interested in the “new world”, this report is a good first step in taking a look at not only where your organization is at with respect to how they view marketing, but also how you, as a Marketer are approaching Marketing. I’ve created a 5 level of Marketing Automation and Campaigns capability matrix (see the above figure). Often times you may not know what level your organization is at or what else you could be doing. This maturity level overview helps you to see where you are and also what other levels you can achieve.

How Can You Get Started?

  • Begin to have a revenue mindset
  • As you choose technology, ask yourself, can I show how I generate revenue with this technology?
  • And if I have the right technology, how am I going to present that I am contributing to the bottom-line to the senior leadership team?

Change Means Politics Heat Up       As part of any change in an organization, you’ll want to be careful of organization change management issues that come up with change. The roles of Marketers and Sales are both needed and provide great value. But if Marketers are becoming Chief Revenue and Innovation Officers because they have a lot of data and know how to use it to close sales, make sure to think through how that might affect other departments (Sales, IT, Customer Service…) And if / or when Marketing transforms into a “Revenue and Innovation Organization” what now is the role of Sales, IT and Customer Service?

Redefining Roles    In one particular company that I worked with on this this transformation, Marketing became responsible for the top and middle funnel revenue drivers. Sales then transitioned into executive account management and renewals: they were really the relationship builders and maintainers. And Customer Service delivered on the “promises” made by Marketing and Sales by integrally working together with Marketing and Sales. This meant that all three departments knew what their new roles were and the importance of customer lifetime value (CLTV). They knew that all three department’s goals were to collaborate to increase CLTV so that customers, whether it was a B2B or a B2C company, spent more time and money with the company over longer periods of time- hence increasing the customer life time value.

What business experts are really striving for with Big Data is to create blue ocean strategies where the competition is irrelevant; we learned that from the authors of the Book, Blue Ocean Strategies,  W. Chan Kim and Renée Mauborgne. We also learned from W. Edwards Deming, that if we listen to our customers and our employees and take that data, we’d have better products, services and companies — which help to build companies that become their own marketplace or live in an uncontested market space. And that’s what can be done with all the data that we have today — if CMO’s know what to do with it.

Making Cross-Functional Collaboration The Most Rewarded Executive Activity    In this particular company, when cross-functional collaboration was a primary part of their culture, Marketing wasn’t spending millions of dollars to acquire customers only to have the other departments provide such poor relationship building and service that the customer’s defected. Instead they made sure that once the customer had bought and come on board, Customer Service delivered on promises by Sales and Marketing. (In your company, it might mean people in these departments have to talk to each other…) Now that’s an interesting concept!

This is just one company’s take on how they approached these issues. I’d love to hear what you think about the report. There’s much more I could / need to cover in this area. This report just a first look at the idea of CMOs transforming into Chief Intelligence and Revenue Officers.

@DrNatalie

Skype: drnatalie007 | LinkedIn | Google+

Catch my latest:
• Thoughts at www.DrNatalieNews.com 
• Upcoming book series: “7 Steps To Digital Customer Experience Mastery” (working title) 

SAVE THE DATE!
Constellation’s 4th Annual Connected Enterprise 
The Executive Innovation Conference | October 29th-31st 

Half Moon Bay, CA | Ritz Carlton
Enhanced by Zemanta
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