Customer Experience: "Moneyball Marketing"
Oakland A's had one of lowest payrolls of any major league baseball team, yet still found a way to make the playoffs 4 out of 6 years from 2001-2006. In 2003, Michael Lewis wrote the book "Moneyball" about their approach and highlighted the differences between their approach and baseballs conventional wisdom.
Talent Selection - The Oakland A's defied baseball conventional wisdom on player selection and on-field strategies, prioritizing On Base Percentage (OBP) more than Batting Average.
Execution - The Oakland A's playing approach was focused on getting on base more often (vs. a slugging / Home Run focus), not making outs (less stealing) and taking more pitches from opposing pitchers (making opponents use less effective pitchers later in games).
Metrics - The Oakland A's used their own set of metrics to provide feedback to each player on how well they were focusing on the overall strategy (OBP, not stealing, taking pitches) as part of an overall team effort, vs. traditional statistics (hits, stolen bases and RBI). Players were coached to a strategy that delivered a better "team outcome" instead of a focus on individual results.
Results - When compared to other playoff teams, the Oakland A's spent 45% less on a "cost per win" basis - and 35% less than the league average. This represents a significant difference that was ultimately copied by many general managers across Major League Baseball for the last decade.
The Oakland A's success in Business Terms:
Top Quartile performance at 45% less than other Top Quartile performers (and 35% less than industry average costs)
End-to-end alignment and discipline: Talent Selection, Coaching, Execution, Measurement and Results feedback
Leadership Factory: Built the next generation of industry leaders and changed how the industry operates
Customer Experience represents a similar opportunity for leaders looking to grow revenues and profitability. Delivering an outstanding customer experience is proven to provide results similar to those that the Oakland A's realized - but many companies fail to realize the results for the same reason other MLB teams didn't employ Oakland's strategy - it defies conventional wisdom.
Customer Experience is Founded on a Set of Simple Principles (and Metrics):
Delivering a great customer experience results in more satisfied, loyal customers (NetPromoter Score)
Loyal customers are more profitable across their lifecycle (customer lifecycle value)
Loyal customers stay longer, requiring fewer new customers to be acquired to realize the same revenue growth goals and reducing the "cost of growth" (customer retention)
Loyal customers generate positive word-of-mouth and referred customers reduce overall customer acquisition costs and accelerate growth (customer referrals)
Yet this common sense approach conflicts with conventional wisdom in many functionally-driven organizations. They use traditional marketing and sales approaches to acquire customers (measuring Cost-per-Acquisition), traditional approaches by the Customer Service group to satisfy existing customers (measuring cost-to-serve) and monitoring customer retention each year, wondering why many customers leave - without aligning the entire organization around customer retention.
Customer experience programs are proven to positively impact traditional metrics - especially in terms of customer acquisition costs, therefore getting the nickname "Moneyball Marketing".
Developing and Executing a Customer Experience Strategy - the "Moneyball Approach" - has Striking Similarities to the Oakland A's Approach to Success
Strategy: Customer Experience is Founded on a Set of Simple Principles (and Metrics):
A customer lifecycle experience that will improve company growth and profitability
Clear metrics on how the customer experience will be measured and targets to achieve
How this experience will differentiate the company from its competitors
Talent: Everyone involved in delivering customer experience should be aligned to their specific role in customer experience delivery. This begins by adjusting job roles, performance metrics and business processes. It should drive changes in the recruiting process, from job ads to interview questions, on-boarding, performance evaluations, reward systems and talent management reviews. Companies should be hiring experienced customer experience delivery staff, who can focus on end-to-end strategy delivery vs. functional specialists focused on traditional metrics.
Aligned Execution: Execution is the most important part of the customer experience - and everyone in the organization should be on the same page of the playbook in delivering the target customer experience. In baseball, coaching and player performance drive the results, and in business, "on-strategy" performance of customer experience employees and daily "coaching" from their managers to guide them and provide "on-strategy feedback" is essential to delivering the customer experience as planned.
Results & Metrics: Providing feedback to the entire organization about the customer experience to generate positive word-of-mouth and referred customers who reduce overall customer acquisition costs and accelerate growth.
Voice-of-the-Customer systems that collect and distribute customer feedback about their experience in a timely enough way for employees and delivery partners to see the impact of their actions and adjust to meet the target customer experience goals
Clear and timely reporting of results vs. targets - customer retention improvements, increase in word-of-mouth /referred customers, customer loyalty metrics - and direct linkages to revenues and bottom-line profits is critical.
Identification of top performers & best practices is critical to building high-performance role models and culture.
The Oakland A's faced a number of internal and external challenges to using the Moneyball approach to winning. Their success required a deep and unwavering commitment to overcoming these challenges. Businesses driving a customer experience strategy face similar challenges:
External Critics: Every unconventional approach has critics deeply invested in traditional approaches, and customer experience is no different. Typical critics include consultants, functional experts or analysts who advocate traditional approaches to marketing programs or customer service strategies, focusing on traditional metrics, but not on the lifecycle impact of building strong customer loyalty that drives word-of-mouth growth, improved retention and higher customer lifecycle profitability.
Internal Leaders: Many companies find that existing leaders with traditional backgrounds in sales, marketing, customer service, account management, product management or financial analysis feel threatened by new approaches, metrics and strategies. In addition, their approach to recruiting, on-boarding, performance feedback and talent management outcomes can severely impede a customer experience strategy by hiring, training, coaching and rewarding old behaviors and approaches.
Lack of Early Results: Those looking to maintain the status quo will find and use data that supports their traditional approaches to limit or stop unconventional approaches. Progressive leaders invest in high-opportunity quick wins to create momentum, new CX scorecards to provide clarity of metrics and linkage of CX efforts to business strategies to minimize conflicting efforts and maximize impact.