The Lessons Learned In The Last 25 Years

The First Lesson: Ignorance Is An Entrepreneur’s Best Friend!

Introduction
The June 2006 issue of Customer Inter@tion Solutions® magazine will represent the culmination of 25 years of publishing and informing the world’s contact/CRM centers and customer interaction centers. During that period of time, as is normal in every endeavor, we made plenty of mistakes and learned from them as we went along.        

In addition, we also observed a tremendous number of companies in the contact center field that continued to make mistakes and, in some cases, they never learned from them. Most of those companies with that attitude are no longer around. Please note that the following are all true stories. Obviously, the tremendous amount of information we have gathered since 1982 when Telemarketing® magazine (the former name for the current Customer Inter@ction Solutions®) laid the foundation for the world’s contact centers/CRM and customer interaction centers would fill several volumes of books. However, I will try to share with you just a few of the highlighted lessons that could help us become better managers by avoiding errors.

Lesson #2 — Why Do Some Companies With Poor Products Succeed And Others With Very Good Products Fail?
Believe it or not, this was precisely the case for a pair of companies, one with a great product and the other with a mediocre product. Ironically, the former (the company with a great product) nearly went bankrupt, while the company with the mediocre product maintained better than 80 percent market share! If you asked me to explain why this was so in one word, I would say, “marketing.” If you allowed me three words, I would say “lack of marketing” and if I could use two more words, I would say “lousy marketing.” Believe it or not, this is a true story, and I admired the company with the highest market share simply because the CEO of that company was a master marketer, while the CEO of the failing company considered marketing to be a necessary evil, and he gave it only lip service. The ironic thing, in this case, is that the above scenario occurred with not only many high-technology companies, but also with several teleservices companies.

Lesson #3 — The Case For The Teleservices Companies
Company A and Company B ranked #48 and #49 in the Top 50 Teleservices Agencies ranking as selected by the editors of Customer Inter@ction Solutions® magazine. The CEO of Company A was a master marketer and frequently consulted with TMC. He followed practically every suggestion that we gave him. He was also an excellent manager and had very talented and hard-working employees. As a result, the company rose from #48 to #2 in the Top 50 rankings (over a five-year period), and thanks to the tremendous business savvy of the CEO of Company A, the company went public in the mid 1990s at about $15 a share. Subsequently, the price rose to $80 per share. Later on, there was a two-for-one split, and the split stocks also rose to $80 per share. The bottom line is that the CEO and founder of Company A cashed in an estimated $600 million worth of stock, and through exceptional investing, he has now become a billionaire. Company B did nothing: no marketing, no promotions, no advertising and, therefore, the company went nowhere. Again, this is a true story.

Lesson #4 — Having A Marketing VP With No Budget
Believe it or not, some companies are short-sighted enough to have a marketing vice president, but no budget. They try to rely completely on word-of-mouth marketing. Even if these companies have not gone out of business over the last 25 years, they have not made much progress, either. To me, it is incomprehensible for any company to have a director or vice president of marketing, but no budget for promotion or advertising.

Lesson #5 — Rush To Market
Back in 1990, a leading company in our industry came up with a product that was supposed to be all things to all people. For political and personal reasons, this product was marketed long before it was ready. The powerful marketing and previously existing respect for this company in the industry led many innocent call center executives to adopt that technology, only to find out that it was completely non-functional and, in fact, it was nothing more than a major headache. As a result, the company lost major market share and still has not recovered from that disaster.

Lesson #6 — Suing Your Influential Customers
Another idiotic and totally incomprehensible action that a few CEOs have taken in the recent past was actually threatening to bring a lawsuit against their leading customers. The reason? The customer refused to renew its contract with Company A because of Company A’s obsolete product and unreliable technical service. The shortsighted CEO of Company A was blinded by his ego and did not realize that the contact center industry, like many other industries, is an extremely wellconnected group. In other words, when somebody screws up a great company by offering lousy service, yet does not allow customers to go elsewhere by virtue of threatening lawsuits, that CEO has no reason to exist, in my opinion. Fortunately, one such CEO was let go just before the company went under. This was not the first time I had witnessed such an illogical and idiotic action of bringing a lawsuit against a prestigious customer. Back in my chemistry days, the CEO of a chemical adhesives company where I was employed submitted a completely defective product to the company’s leading customer. When the customer refused to pay, the ill-advised CEO brought a lawsuit against the customer. That ill-advised action took the chemical company, which had heretofore been the #1 supplier to the industry, to last place. Eventually, the company was sold for practically a song to a leading competitor. One wonders how the board of directors of any responsible company could put up with this kind of stupidity — instead of providing maximum care for their leading customers, they actually brought a lawsuit against them. Yes…it sounds utterly stupid, but it has happened and I have witnessed it.

Lesson #7 — The Demise Of Horizontal Trade Shows
Once upon a time, the grand-daddy of all technology shows, COMDEX, featured exhibitors who offered soup-tonuts in terms of products. Suddenly, there was a shift in the marketplace from exhibiting at horizontal shows in favor of exhibiting at small but highly focused and targeted trade shows. As a result, COMDEX no longer exists. What made matters worse in COMDEX’s case were ill-advised managers who treated every exhibitor like dirt and dictated to those exhibitors that if they wanted a particular space the next year, exhibitors must increase their booth size by 20 to 50 percent. The rule was, “Take it or leave it.” Eventually, exhibitors who were not getting much business out of COMDEX anyway declined to continue exhibiting, and COMDEX is now history.

Lesson #8 — The CEOs Blinded By Ego
As I have indicated in many of my previous editorials, a CEO can be a double-edged sword. On the positive side, a CEO with the right frame of mind and the proper attitude can enhance the revenues of his or her company tremendously. The right CEO will actually build and reinforce relationships with all customers, or as many of his customers as possible and, in fact, will play the role of ambassador for the company. Alternatively, many CEOs would prefer to deal only with other CEOs. In such cases, the wrong CEO (who is rude and has a huge ego problem) would spell disaster. I know one CEO who inherited a company with about 80 percent market share. That market share was largely the result of an outstanding CEO who had run the company previously. The new CEO, a person with horrible interpersonal skills, came in and started to break most, if not all, of the company’s relationships one by one! As a matter of fact, I became so disgusted with that particular company that I wrote an editorial about how lousy some companies are in treating both their customers and the leading media in their industry. One analysis that I used was that the company acted as if the world owes them everything and they owe nothing in return. Needless to say, that particular CEO was let go, and the rest of the company was extremely happy for that.

Lesson # 9 — Build Great Products And Keep Them A Secret!
Another great lesson that we continuously learned from mistakes made by small to medium-sized companies is as
follows: The tendency of technology companies has often been to build a better mousetrap only to find that the mouse died 15 years ago! Believe it or not, as funny as this may seem, this is still the case in 80 percent of technology companies. As I have indicated in previous editorials, I once visited the CEO of a speech technology company who had an outstanding speech product. I was very taken by the natural speech that was incorporated into their solution. I said to the CEO, “You have a great product here. How are you going to market it?” He replied, “I have invested 35 years of my life and every penny I had in developing this product, and right now I have no money for marketing.” Can you believe this idiotic comment? We have stated in these editorials many times that “If you don’t market, you don’t exist.” In fact, in previous editorials, I updated that comment by saying, “If you’re not on the first page of Google and/or Yahoo search results for your industry, you don’t exist.” Nevertheless, high-tech companies continue to ignore the rules of marketing and they give only lip service to it. Ironically, the few companies that do market seem to have one or more of the following problems:

With that many problems, it is no wonder that many who do a lousy job of marketing don’t blame their lack of knowledge about effective marketing; they say marketing doesn’t work or advertising doesn’t work, whereas in reality, their poor marketing message has all of the above problems and, in most cases, their messages have no call to action. That should explain the reason for unusually high rates of failure within the technology companies — they typically spend 95 percent of their budgets on research and development of new products and next to nothing on marketing. Today…no company prospers without the implementation of well strategized integrated marketing.

Lesson #10 — Don’t Hang Your Hat On PR Alone
Many times, I have witnessed CEOs and vice presidents of many technology companies go on media tours with the public relations (PR) staff. The companies visit both the leading publications as well as the industry analysts. Often times, they feel that their visit will lead to press via public relations, and thereby they feel that their marketing job is done. Many CEOs, while visiting the leading media providers, rarely ask “How do you think I should market my product?” And that is the source of the problem, because a leading publisher who really understands the industry can offer practical solutions and suggestions for effective marketing strategies at no charge. Yet, many companies are not receptive to it, and they feel that PR alone is going to do the job. In my humble opinion, that will never happen, and it is only wishful thinking.

Lesson #11 — M&A Blunders
In the mid 1990s, when the contact center industry was flourishing and growing at literally 50 to 100 percent a year, Wall Street became extremely interested in the contact center industry, specifically in teleservices. Investment bankers started calling me and asking me what I thought about this company or that company. It looked as if there was a feeding frenzy or, more specifically, an acquisition frenzy going on. Every week or every month, I would hear of a new acquisition. I was concerned about this activity: not because I did not feel that consolidation would be good, but because many of the acquirers were financial buyers, which means they were strictly interested in making a profit and they were clueless about the many, many details that need to be considered in order to effectively run and manage a call center. I recall talking to such a financial buyer who used to be a waiter in a restaurant; he then purchased the restaurant and subsequently went into the real estate business and made a ton of money. At that time, he discovered the rapid growth of call centers. As a result, he borrowed millions and acquired half a dozen incompatible and sub par companies. Before too long, as expected, he ran into major problems. I recall receiving a call from that person asking me what he had done wrong. Unfortunately, it was too late. If he had called me prior to the acquisitions, I would have told him that his particular combination of incompatible companies would never have become a unified profit center. As a result, millions of dollars were wasted.

Lesson #12 — The Unlikely And Unfortunate Story
A few years ago, a poorly funded company (Company X) claimed to have developed a new technology that raised the eyebrows of all technology-savvy people. The company made every claim known to mankind, and they made many, many promises. While no one was taking them seriously, they decided to manipulate an analyst to state that upon evaluation of all products in this category, the analyst found Company X’s product to rank at #1. Obviously, some monetary rewards must have changed hands, otherwise such nonsense never would have been presented. The industry was up in arms. All manufacturers were against this action and they spent a considerable amount of time informing the rest of the industry to beware of Company X’s questionable practices. To make a very long story short, eventually Company X went out of business.

An Analysis Of The Above Wasteful Cases
I have always wondered what is in the minds of the people who continue to make mistake after mistake and misleading statement after misleading statement, getting involved in all of the problems that I have outlined above. I once explained some of these problems to a highly respected CEO of our industry who, in my judgment, was one of the most, if not the most, knowledgeable CEOs in our industry. I shared with him some of the errors that were being committed. I asked him what he thought about the issue. His answer was, “If this industry wasn’t so good, many of those CEOs would be pumping gas!” The more I thought about it, the more I realized he was right. Obviously, the purpose of this editorial is not to embarrass anyone or badmouth any individual or any company; rather, the main objective of this editorial is to learn from some of the mistakes made in the last 25 years. If I can prevent anyone from making any of the above mistakes, I think I have accomplished what I set out to do!

As For Ignorance Being The Entrepreneur’s Best Friend
I am a firm believer that ignorance is truly the entrepreneur’s best friend. I once read a study made by a reliable research organization that stated that 90 percent of entrepreneurs are between the ages of 30 and 38, because that is a period in life when people don’t know an excessive amount about business, but they do know some things for real. Consequently, entrepreneurs in that age bracket are more likely to take a plunge, and once they are in the water, they know that they have to sink or swim. That element alone leads the entrepreneurs to become successful.

The Case In Point
Indeed, such was the case with Telemarketing® magazine back in 1982. After the second issue of the publication, we literally ran out of things to write! My editor came to me and asked “Are you sure this is an industry?” I replied, “No, I am not sure, but we are going to make it an industry,” because I believed that Telemarketing® magazine (which I defined as “The magazine of electronic marketing” back then) had a tremendous future in the business community. The moral of this story is that had I known too much and had I known that after the second issue there would be nothing to write about, I probably would not have started the magazine, and the rest would have been history. Consequently, I continue to believe that ignorance is the entrepreneur’s best friend!

As always, I welcome your comments. Please e-mail me at [email protected].