Sarah E. Toms is an Executive Director and co-founder of Wharton Interactive where she has built award-winning EdTech teams that develop highly engaging games and simulations, which are played by tens of thousands of students globally. Her drive to modernize, transform, and democratize education led her to co-invent simpl.world, an open-source simulation framework. As an entrepreneur for more than a decade and a demonstrated thought leader in the technology field, Toms has founded companies that build global CRM, product development, productivity management, and financial systems. She is dedicated to supporting women and girls in technology through her work with the Women in Tech Summit and techgirlz.org. Follow her on Twitter at @SarahEToms.
Peter S. Fader is the Frances and Pei-Yuan Chia Professor of Marketing at The Wharton School of the University of Pennsylvania. In 2015, Fader co-founded Zodiac, a predictive analytics firm that was acquired by Nike in 2018. More recently, he co-founded Theta Equity Partners, which focuses on customer-based corporate valuation. His expertise centers on topics such as customer relationship management, lifetime value of the customer, and strategies that arise from these data-driven tactics. Fader is also the author of Customer Centricity: Focus on the Right Customers for Strategic Advantage and he has been interviewed in The Wall Street Journal, APM’s “Marketplace,” NPR’s “Planet Money,” ABC’s “Good Morning America,” Forbes, and more. Follow him on Twitter at @FaderP.
Questions
Highlights
Sarah shared that what was interesting to them was when they started writing the book they actually started to create sort of this Frankenstein, it was a combination of a simulation manual and some interesting stories and interesting content about customer centricity and how to actually put customer centric thinking into action and they brought it to their publisher and they said, “Get rid of the simulation stuff, flush out more about the book, make it a standalone piece if people want to run the simulation and read the book. That's fantastic.” But they really need something that engages folks who are working in the trenches day in day out and give them a clear guideline for how to become customer centric.
Sarah stated that at the end of the book they have a manifesto which really comes from her experience in technology and software development, where she experienced something very similar to what she’s learned now with partnering with Pete over the last four years…..five years that's happening in the marketing science world as well. And that is it, they're being inundated with all this data, there's data insights and data collection and it's becoming cheaper and easier and faster to just collect swathes and swathes of information about their customers and how they behave and what makes them buy etc. And the problem is that a lot of it is garbage and so we had something similar happen in the software development realm in the dot.com heydays where they had this tremendous capability with technology and the problem was they were really weighed down by old bureaucratic bloated software processes, she’s talking about waterfall where they had to write reams and reams of documentation and they weren't able to work leanly and be able to keep up with the technological advances in a way that was in line their our customers and their business users and what they actually wanted from the software that was being developed. And so, this sparked an idea as she was having these conversations with Pete and she said, I think what we really need for customer centricity is we need a manifesto as well. We need something that will really focus business people, it will give them just simple clarity around what is important and what they need to double down on with regards to customer centricity.
Yanique mentioned that the book is a playbook, anybody in an organization in a leadership role or non-leadership role can pick up the book and they will be able to have a guideline like step by step as to how they can really master customer centricity in their business, whether they're an organization that has customers that come in or they're an online business.
Sarah stated that the way that they've laid out the book from the playbook perspective is to really think about those different functional areas. Our goal with this to most definitely make sure that this was a cross-functional conversation. This playbook is not just for the sales person or the marketing person, this is for the data person, it's for the finance people, it's for the folks in H.R., the folks who are developing the products are indeed, this is for everybody. And it's really again pivoting and pivoting so that your customers are at the center but understanding that this heterogeneity at play within that customer base and how are you really going to focus in on what you need to do. So, when you're thinking about acquiring those customers, when you're thinking about retaining them and developing them, when you're thinking about having conversations with those in your technology team on how to tag them and track them and understand what information is actually important when it comes to figuring out who's valuable today, who will be valuable tomorrow and when I'm acquiring new customers who's more than likely going to be valuable to the organization and then taking all of those conversations and making sure that folks in your finance team understand what that means from the customer lifetime value standpoint.
Sarah shared that one of the shining examples that they use a couple of times in the book is Electronic Arts. So, Electronic Arts is really one of the most mature organizations that they've seen with regards to customer centricity. Every day as players are playing their games they are collecting data about behaviours about what they know about who's more than likely going to be a high, medium and low value customer and they're feeding that information back to the game studios, they're letting them know, “For our high value customers, did this part of the game work the way we thought it was going to, did we see this as high engagement as we were hoping and if not why not and what do we need to do to pivot in the actual game development.” They're using information about these customers with how they advertise to them. So, not just saying, “All right well, here's our advertising campaign for this game, we'll put it out there, it'll be out there for a month, three months, five months.”They're using that information about their customers to actually fine tune how they target and attract the customers that they're looking to seek.
Yanique mentioned that it is definitely a combination of many different things all in one in terms of an organization looking at how the customer is interfacing with their product or their service, the frequency of them utilizing that product or service and of course to spend.
Sarah agreed and stated that RFM (Recency, Frequency, Monetary) is still key. RFM is a marketing technique used to determine quantitatively which customers are the best ones by examining how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary). To build on what Peter was saying about customer lifetime value in chapter 1, they spend some time delving into problems with CLV that they see that are common out there and mistakes that are being made with the calculation itself. So, CLV itself can be quite complex and there's lots of open source ways to leverage and create CLV calculations within your organizations. But they do spend some time going through the mistakes which should hopefully shine some light on how to be tracking and calculating CLV correctly in your organization.
When asked how do you know which one is the right CRM to go with, Sarah mentioned that unfortunately there aren't any great additions to CRM yet that they've seen. In her conversations with a number of the companies that appear in the book, L.A. Dodgers is a great example, they have had to build their insights outside, so they use salesforce and they're then doing the analytics sort of outside, their tracking all of their customers in their CRM but then they're running a different algorithms etc. in other systems which is unfortunate. So, she thinks Peter would agree that a lot of the companies that he has been working with they're having to kind of roll their own if you will because there isn't a good solution out there yet.
Peter agreed and stated that that is unfortunate. They were in the process, they were creating that solution through his company Zodiac, but Nike bought that firm which was of course a wonderful outcome but now it's all under the swoosh. So, he really hopes that companies can learn from those experiences. And again, a lot of that through that they're trying to convey in the book both laying out these frameworks as well as these specific company profiles that Sarah has been referring to.
Sarah stated that just to go back to the original question there was the whole point everybody thinks, “Okay well, customer service, it's to turn ugly ducklings into beautiful swans.”This is another point in the book is really think and this was to Peter's earlier point, we've got all of these sort of ways that we engage with our customers, ways to increase CX quality, ways to increase hopefully customer loyalty but it's very rare that you take somebody from your bottom tier from a customer lifetime value standpoint and boost them all the way up to the very top. And so, rather than think that you can do that and expend a tremendous amount of energy trying to achieve that impossible dream, just look at what you're doing and understand who you're serving from a CLV standpoint. So, customer service is really for your lower value customers and the same with loyalty programs like understand that that's who you're really targeting those types of programs to.
Peter shared that he’s addicted to Twitter, but whether it's for news, sports, entertainment but also just a whole bunch of people that he follows who are always looking for the best practices of how companies are using their customer level data. So, just the million anecdotes a day some good, some appalling but it's just a great way to learn a lot of different stuff and then make up your own mind about which is good, and which is not so good but good to have that kind of broad exposure. Peter shared that he doesn’t read books anymore, Twitter is the firehose that really keeps him attached to the world.
Sarah agreed with Peter and stated that she did so much wonderful reading and thanked Peter for your amazing library and contribution to that. She mentioned at the beginning of the interview that their guiding goal with this book was to land in that cross functional space and to really try to ignite a conversation about really the organizational and cultural changes that must happen cross functionally in organizations in order for customer centricity to really take root and she stumbled on this book called The Silo effect: The Peril of Expertise and the Promise of Breaking Down Barriers by Gillian Tettand it is a fantastic book, it's one case study after another of where breaking down the siloing effect that happens in organizations where that has been good for some organizations and where it's existed, where it's been really perilous and difficult. So that's one book she most certainly recommends. The other book that she recommends is The Effortless Experience: Conquering the New Battleground for Customer Loyalty by Matthew Dixon, but this gentleman has it right, you shouldn’t be trying to overdo it with every single customer, and he has written some incredible books in the CX space as well.
Yanique shared, I am familiar with Frederick Reichheld, I read a couple of years ago when I just started this business, The Ultimate Question: Driving Good Profits and True Growth, I haven’t read The Loyalty Effect but he definitely opened my mind up when I read the Ultimate Question.
Peter stated that he’s glad that Yanique made the connection. He (Fredrick Reichheld) laid out these ideas but in 1996 but it wasn’t until 5, almost 10 years later that he kind of translated them into the Net Promoter Score, this is the metric that’s going to help us identify companies that have been doing a good job at finding those customers and deepen those relationships. So, a lot of people think that Net Promoter Score just sort of appeared in the early 2000s, but it was really decades of work and thinking and just careful consideration by Fredrick and his colleagues at Bain that made that possible. And again, that revolution he thinks sparked a lot of the work that we’re doing and great admiration for the folks over there and enjoy his own collaboration with them.
When asked if there was anything is there anything, she’s working on to develop herself or her people - Sarah shared that she is. About a year ago she launched a new team at the Wharton School called Wharton Interactiveand they are building platforms to transform education. So, when you're looking at creating experiential learning in classrooms, it's expensive, it takes a long time, it's hard to change and fine-tune once you've launched experiences and really what she has discovered over the last six years being in this niche in EdTech is that platforms provide a way that forward where we can start to build truly transformational experiences for less cost and ones that we can then fine tune and learn from and so they're leveraging ultimate reality gaming,they're leveraging even smaller things like text messaging and social media patterns to really create social learning and don't democratizing that educational experience for the learners. So, a lot of the work that she has been doing with Peter in understanding and fine-tuning folks’ eyes to heterogeneity with customers, she has been starting to think about how they bring that into learning space and creating more fine-tuned and tailored experiences for the learners knowing that not everybody learns the same way. So, that she’s very excited about, very proud of you can find out more about what they're doing at www.interactive.wharton.upenn.edu.
I'm especially intrigued by Sarah's approach to education, I do think it's something that will definitely impact customer experience in the long term. When I think about my daughter who is 13 years old and some of the challenges that they have in schools, trying to get through to these children with the information that they're trying to simulate. I find that we're teaching children in 2019, but we're using methods that were applicable in 1975 and it's clearly not reaching the audience that we're trying to reach now, they just need to be stimulated in a higher way. And so, I hope some of the work that you are doing, it materializes that it can stretch to different parts of the world like Jamaica. Because I don't know what it's like in the USA, I'm sure you probably have you greater exposure to better opportunities, but here, I can see that the methodology that they are using is definitely not as impactful and I think based on what you are saying if hopefully that can become more widespread in the long term these children who will become business owners or employees in organizations that we’re all going to have to be customers of it would be great for them to have that experience from early, Yanique mentioned.
Sarah shared that she has a 10-year-old son, she also has 3 teenage daughters and we're not just teaching the same way we did in the 1970s, we're teaching the same way we did in the 1900s, so there is a lot of work to be done in moving the needle and with a lot of pride.They're doing some amazing work at the Wharton School and it's with great partners like Peter Fader who are willing to take the leap and who are also pushing and challenging teams like hers to think outside the box and bring something new to the table for the learners.
www.customercentricitymanifesto.org
Sarah shared listeners can find her at –
Linkedin – Sarah Toms
Twitter – @SarahEToms
www.interactive.wharton.upenn.edu
When asked if there is a possibility for the playbook to be developed into an online course, Peter shared that he has some older online courses that are more about the kind of original aspirational, definitional, motivational stuff. The best thing that they have is the new customer centricity simulation, that really brought them together.
Sarah shared that they've got the existing simulation, it's usually played in teams and usually played with faculty or teachers who are facilitating the experience and so they've got that experience. Her team is also starting to work on a steam-based game, so folks who are interested in learning can just go to steam and they'll be able to download a single player game from that marketplace. And then she also has designs to work with Peter on creating something in the alternate reality gaming space on their arc platform and that will be a massive online offering, hopefully not too far down the road from now.
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