Category Archives: Sales governance

In the Digital Revolution, Customers Have Nothing to Lose But Their Privacy

“If advances in technology during the industrial revolution swung the balance of power toward the corporation, those of the digital revolution have swung it back toward the customer,” Matt Watkinson wrote in his book, The Ten Principles Behind Great Customer Experiences.

The precarious balance of commercial power, always teetering and tottering! The effects can be easy to observe, but they are hard to measure. A situation that allows generalizations, so I’ll pile on with one of my own: over the past 20 years, ubiquitous information has helped customers amass formidable strength. Strength that enables them to bubble up negative vendor reviews in a single mouse click. Strength that yields lower prices. Strength that reduces or eliminates buying mistakes. Slay the oppressors! Woe to the malevolent enterprises that price gouge and rob sacred purchasing dollars! For consumers, the evolution compares to moving from defending ourselves by throwing stones to having crossbows with curare-tipped arrowheads in our quivers. Pundits reinforce this viewpoint, crafting catchy phrases that have become emblems of our time: “57% of the purchase decision is complete before a customer even calls a supplier!” and “The salesperson is dead!” The pendulum has swung, and consumers have grabbed the rope! Huzzah! Take that, unsavory sellers!

Companies like Alphabet (parent company of Google), Amazon, Microsoft, and Facebook are giddy over this narrative, because it diverts attention from what they do with the massive data troves they are constructing, terabyte by terabyte. While everyone crows about how the consumer information arsenal has advanced to poison arrowheads, vendor weaponry has stealthily gone nuclear.

“Right now in the U.S. it’s essentially the case that when [consumers] post information online, you give up control of it. So there are terms of service that regulate the sites you use, like on Facebook and Twitter and Pinterest — though those can change — but even within those, you’re essentially handing control of your data over to the companies. And they can kind of do what they want with it, within reason. You don’t have the legal right to request that data be deleted, to change it, to refuse to allow companies to use it. Some companies may give you that right, but you don’t have a natural, legal right to control your personal data. So if a company decides they want to sell it or market it or release it or change your privacy settings, they can do that,” said Jennifer Golbeck in TechTalk, July 1, 2014.

The companies that Golbeck mentions perform their data hoarding and analysis in subterfuge. And when it comes to revealing intentions for its use, these and other data behemoths are anything but transparent. It’s “difficult to predict how information you reveal now could be used five or ten years out, in the sense of new inferences that could be discovered. Researchers may find that a piece of information ‘A’ combined with a piece of information ‘B’ can lead to the prediction of something particularly sensitive — also in the sense of how this particularly sensitive information could be used. These are literally impossible to predict, because researchers every month come up with new ideas for using data. So we literally do not know how this will play out in the future,” explained privacy economist Alessandro Acquisti in a TED Talk, Why Privacy Matters.

Like it or not, your online experiences are controlled by algorithms feeding off your copious digital exhaust. That affects what you know, what you will know, and more ominously, how you live. Most consumers underestimate how much companies know about them, but today, sellers possess enough knowledge to infer customer desires, and to surreptitiously influence their actions.

But the government protects our privacy, right? If you believe that, I have some primo swampland in Florida to sell you. According to the website, Practical Law, by Thomson Reuters:

“In the US, there is no single, comprehensive federal (national) law regulating the collection and use of personal data . . . Instead, the US has a patchwork system of federal and state laws and regulations that can sometimes overlap, dovetail and contradict one another. In addition, there are many guidelines, developed by governmental agencies and industry groups that do not have the force of law, but are part of self-regulatory guidelines and frameworks that are considered “best practices”. These self-regulatory frameworks have accountability and enforcement components that are increasingly being used as a tool for enforcement by regulators.

There are already a panoply of federal privacy-related laws that regulate the collection and use of personal data. Some apply to particular categories of information, such as financial or health information, or electronic communications. Others apply to activities that use personal information, such as telemarketing and commercial e-mail. In addition, there are broad consumer protection laws that are not privacy laws per se, but have been used to prohibit unfair or deceptive practices involving the disclosure of, and security procedures for protecting, personal information.”

If you’re feeling inhibited about baring your most intimate digital details to strangers online, there’s a remedy: move offline. Or, to California. The state “leads the way in the privacy arena, having enacted multiple privacy laws, some of which have far-reaching effects at a national level,” according to Practical Law.

That is, until 2017, when Congress and the Trump administration got their mitts on our privacy. Trump made Americans exposed again by approving a bill that weakens consumer privacy protections. “The House of Representatives has gone along with the Senate and voted 215-205 to overturn a yet-to-take-effect regulation that would have required Internet service providers — like Comcast, Verizon and Charter — to get consumers’ permission before selling their data . . . Congress’ approval is a loss for privacy advocates, who fought for the regulation, passed in October of last year by the then-Democratic majority on the Federal Communications Commission,” wrote NPR’s Brian Naylor in an article, Congress Overturns Internet Privacy Regulation

A “future without secrets?” The confluence of facial recognition and ubiquitous computing has shoved power pendulum away from customers and back to . . .  other entities. No one knows exactly where digital stuff goes, how long it’s stored, or who has access to it. In the commercial arena, power is now consolidated in an oligarchy of companies. That creates more concern, because in everyday transactions, a smattering of lightweight consumer information resources are going up against prodigious power brought by heavy corporate investments in data science. I know where I’m placing my bets.

All this makes the breathless hype about customer dominance and vendor weakness in the digital age seem silly. Sure, online product reviews and “transparent” pricing give buyers more lethal curare. But data warehouses chock full of individual profiles tied to predictive analytics give vendors ICBM’s.

“Data are to this century what oil was to the last one: a driver of growth and change,” according to an article in The Economist, Fuel of the Future, May 6, 2017. Market research firm IDC predicts that by 2025, data created and copied will reach 180 zettabytes (or 180,000,000,000,000,000,000,000 bytes). “To ingest it all, firms are speedily building data refineries. In 2016 Amazon, Alphabet and Microsoft together racked up nearly $32 billion in capital expenditure and capital leases, up by 22% from the previous year, according to the Wall Street Journal.”

When we have public will for online privacy, we’ll get legislation to protect it. Don’t count on either one. Data-enabled online commerce is all about speed and convenience. “Personalization” is all about ego, and millennials are fueling the demand. Are privacy and driving benefits from big data compatible goals?

Probably not, because consumers show little appetite for compromise. They want Great Customer Experiences, even if it means exposing their private lives to anyone and everyone, and conferring ownership of their intimate details to others I will not name – not by choice, but because I don’t have the information.

Thanks in part to those who grew up online (aka Digital Natives) and others – like myself – who perfunctorily check “I accept” on legal disclosures, disclaimers, and terms of service, vendors are happy to swing on the power pendulum, as long as it remains on their side. In the meantime, those interested in privacy will have to depend on industry self-regulation. The mechanism for that is data governance, which will be the subject of my next article.

Data “empowers the powerful,” wrote Yale anthropologist James Scott. He’s not referring to Joe the Plumber, or Joe’s customers, for that matter. It’s the emerging group of massive data collectors and amalgamators – Alphabet, Amazon, Microsoft, and Facebook . . . and, lately the Federal government, which last month, demanded states provide the names, addresses, birthdates, political party (if recorded), last four digits of the voter’s Social Security Number, and which elections the voter has participated in since 2006, for every registered voter in the country. That’s a big pot of data! The ostensible purpose: to “fully analyze vulnerabilities and issues related to voter registration and voting,” said Kris Kobach, Vice Chair of the White House commission to investigate voter fraud. Yeah, right.

As consumers, we can marvel all we want over the supposed potency our curare-tipped information arrows provide. But right now, the organizations that possess and use the world’s digital information have vastly more power. Power that’s expanding almost as fast as the amount of data we’re giving up – and they’re absorbing.

Doused Fyer: Does Our Obsession with Audacious Innovation Make Us Suckers for Scams?


What’s the difference between aggressive marketing and a sales scam?

The aftermath of the 2017 Fyer Festival  explores this question, and lawyers are debating the answer. Was the event a wayward business venture, or a get-rich-quick scheme? The festival’s originator, entrepreneur Billy McFarland, claims honest intentions, but blames faulty planning and bad circumstances for the festival’s demise.

Over-promise, then don’t deliver. Embedded within the debate lies a festering boil, epidemic in sales: the gap between a company’s marketing speil, and what customers get. With the Fyer Festival, though, it’s not a gap, but a chasm. Some question whether McFarland even had the wherewithal to deliver the flamboyant sales vision he created. Was he committed to keeping his promises? There are at least eight lawsuits pending against McFarland and his company, Fyer Media, and the courts will sort out the answers. The Fyer Festival has become “the focus of a criminal investigation, with federal authorities looking into possible mail, wire and securities fraud,” The New York Times reported on May 21st. This is not your run-of-the-mill business belly flop.

What was promised.  In 2016, McFarland promoted a mega-party scheduled for April, 2017 featuring music, celebrity chefs, gourmet food and luxury accommodations. Fyer Media showcased the venue as an island in the Bahamas called Fyre Cay – which doesn’t exist. One ticket package, the “Artist’s Palace,” was offered for $400,000, and provided four beds, eight VIP tickets and dinner with one festival performer.

To prospects, McFarland scrupulously maintained the festival’s high-end image. Rapper Ja Rule (whose real name is Jeffery Atkins) was touted as a celebrity business partner. Advertising listed musical acts by G.O.O.D Music, Major Lazer, and Migos. Fyer Media targeted millennials, and they sold about 8,000 tickets. To pump up revenue, the company also encouraged customers to pay $1,500 in advance for a digital Fyer Wristband to facilitate cashless transactions for “incidentals.” That added nearly $2 million to the top line.

But a few weeks before the event, as the Fyer hype engine was rocking at full throttle, a harrowing story was unfolding behind the scenes. According to a May 21 article in The New York Times,  In Wreckage of the Fyer Festival, Fury, Lawsuits, and an Inquiry,

“Expenses were swelling: Bed frames and beach chairs were rush-ordered; beach umbrellas had to be flown in, rather than shipped, because of late payments, according to three production staff members. Essential production tools, like walkie-talkies, never even arrived. Back at Fyre Media, the company credit cards were being declined for everyday office purchases.

Employees said they feared that their boss was using funds from their booking app to fund the festival. But Mr. McFarland reassured them in April when he said that Comcast Ventures, the investment arm of the cable and media giant, had agreed to invest up to $25 million in Fyer Media. In fact, Comcast had considered a deal, the company said, but passed ‘after conducting thorough due diligence.’ Mr. McFarland did not tell his employees.

As the festival date neared, the production crew’s wages, paid by wire or cash, arrived late, or short, and then stopped altogether, five members of the crew said.”

“As late as that Thursday evening [before the first weekend of the festival], Mr. McFarland and Ja Rule had continued to assure talent agents that all systems were go. But by Friday morning, both weekends of the festival had been cancelled. Within a few days, Mr. McFarland and the rest of his executive team had left the island, their site strewn with mattresses, empty Champagne bottles and other detritus.”

On April 1st, McFarland was still scrambling to find a location to accommodate the prospective partiers, scheduled to arrive on the 27th. McFarland finally secured a venue, Roker Point on Great Exuma Island. It was too little, too late. The festival was doomed.

What was delivered. Instead of luxurious digs and lavish buffets, arriving customers got tents, and cheese sandwiches on white bread. And lots of horseflies. Vendors lost money, too. Luca Sabatini claims his Miami-based company, Unreal Systems, lost about $10 million. Adding to the dismal ambience, a storm dumped heavy rain on the disappointed partygoers.

The Fyer Festival became a safety crisis. Many attendees could not leave readily. As they struggled to make arrangements, Fyer Media provided them this message on their website:

“Fyre Festival set out to provide a once-in-a-lifetime musical experience on the Islands of the Exumas. Due to circumstances out of our control, the physical infrastructure was not in place on time and we are unable to fulfill on that vision safely and enjoyably for our guests. At this time, we are working tirelessly to get flights scheduled and get everyone off of Great Exuma and home safely as quickly as we can. We ask that guests currently on-island do not make their own arrangements to get to the airport as we are coordinating those plans. We are working to place everyone on complimentary charters back to Miami today; this process has commenced and the safety and comfort of our guests is our top priority. The festival is being postponed until we can further assess if and when we are able to create the high-quality experience we envisioned. We ask for everyone’s patience and cooperation during this difficult time as we work as quickly and safely as we can to remedy this unforeseeable situation. We will continue to provide regular updates via email to our guests and via our official social media channels as they become available.”

The Fyer Festival provides an iconic recipe for a business fiasco: combine a shaky business model, lame assumptions, empty promises, opaque management, unpaid workers, stiffed vendors, jilted customers, and environmental wreckage. Blend and pour. Top off with a generous dollop of management arrogance. Serve.

Selling the vision is the easy part . . . Was McFarland dishonest in selling something he didn’t yet have? Before you answer, remember that selling things before they are available is not new or uncommon. Real estate agents sell resort property “under development,” and companies in many industries sell future services like maintenance plans, for which they may not have capabilities to provide. Lately, Tesla accepted deposits for its solar energy roof tile systems pending future installation. I’m not sure if anyone batted an eye.

What drives sales of not-yet-available products is the abiding hope that vendors will deliver what’s expected. That – and legal contracts. Contracts are created to protect sellers and buyers, and that helps facilitate transactions. But customers must never forget that when vendors write contracts, they prioritize and protect their own interests. Always. Check the fine print: customers generally bear whatever risks the vendors don’t want or can’t afford, and absorb the costs when they come home to roost. The truth about whether the Fyer Festival’s terms of sale offered adequate – or any – protection to its customers will unfold in the coming weeks.

McFarland’s “killer skill.” Customers of McFarland’s earlier entrepreneurial venture, Magnises, “complained that offers, like Beyonce tickets, never materialized, and that annual dues were charged to their credit cards months early . . . Still, he had a way of engendering trust.”

This irony galls me. But I shouldn’t be surprised. It’s rare to find anything written about strategy, tactics, and best practices that’s coupled to maintaining moral or ethical foundations. It’s all about money. We worship revenue production and profit performance. We laud “audacious risk takers” and developers of “the next great thing.”

We enthusiastically offer them advice and encouragement, but we don’t scrutinize their premise, motives, or intent. Senior managers fire functionaries for what they deem misbehavior or “not living up to the company’s ideals,” but they don’t banish their peers after they exploit customer trust. Had the US government not stepped in, Elizabeth Holmes, who admitted that the blood analysis company she founded, Theranos, is a fraud, would still be enriching herself while imperiling her customers. Now she has been forbidden from running another lab for . . . two entire years!

The same apathy allowed a company like SwanLuv to get launched. And the same apathy enabled Billy McFarland, a checkered serial entrepreneur, to execute a harebrained venture like the Fyer Festival, and sell 8,000 tickets. As long as there’s a pot of gold at the end of the entrepreneurial rainbow, who cares if people get hurt or die as the result of someone’s misguided aspirations?

“We’ve moved from an industrial economy to a consumer economy to a service economy to an information economy to what you might call a flagrant-exploitation economy – one in which branding and ‘storytelling’ have replaced advertising and possibly even reality. It’s not just that we’re being sold the sizzle more than the steak. It’s that we’re being sold the sizzle instead of and at the expense of the steak,” Carina Chocano wrote in a New York Times article, False Front.

“Cultivating authenticity” – the new watchword for marketers. “If everything lived up to its hype, the world would be burdened with far fewer bad movies, miracle vitamins and optimistic campaign promises,” Chocano says. “Wells Fargo employees spent five years creating millions of fake accounts for unsuspecting customers in order to charge them additional fees; the year before this practice was uncovered, a news release introduced the bank’s new brand campaign as one that would ‘eschew product promotion for storytelling.’ [President Trump] has agreed to pay millions in fraud settlements to thousands of students of his ‘university,’ with its $35,000 ‘Gold Elite’ program; his daughter, whom he has employed for much of her career, has published a book in which she writes about ‘cultivating authenticity’ and presents herself as an accomplished businesswoman. It’s a brand that she’s selling – the have-it-all sizzle of a self-actualized career woman and loving supermom in fashionable shoes. Who cares whether, somewhere behind it, there may be the equivalent of an undeveloped gravel pit and some unboxed disaster tents?”

Say it loud! I’m fake and I’m proud! Chocano believes that the scam economy might be entering its “baroque phase.” Even for the wary, it’s difficult to distinguish between real products and knockoffs, legitimate email from phishing, and honest companies from scammers. For the latest artifacts, check out Hoax Slayer or the US Federal Trade Commission website. Our culture and basic antipathy for commercial regulation has made the US fecund for “dissemblers, operators, and downright swindlers,” Duke University professor Edward Balleisen writes in his book, Fraud: An American History from Barnum to Madoff.   “Some of the psychological impulses that show up again and again in the history of business fraud reflect widespread aspirations or anxieties,” Balleisen says. In particular, “the passion for easily attained wealth.”

If you want an antidote, ask a preschooler. The Muppets, featured on the children’s TV show, Sesame Street, help young children develop skepticism, and might inoculate them to scammers. In one episode, a character named Lefty offers to sell Ernie one of his products. “I got something you need, and I can sell it to ya real cheap,” he says. Ernie gives Lefty five cents for a bottle of air, which he accepts. After pouring the air into Ernie’s furry hands, Lefty keeps the bottle, explaining that Ernie’s payment did not include the packaging. Other episodes show Lefty selling Ernie similarly worthless products, including an empty box and the number 8. Kids as young as three understand Ernie’s folly. In just 15 years, however, a child’s skepticism gets neutralized. Blame it on powerful sales messages, clever “content marketing,” or the constant drumbeat of honors bestowed to those who got rich quick. It’s a shame such memorable consumer lessons are only offered to the very young.

“The big generational shift since [the ‘70’s],” Chocano writes, “is from cynicism and avoidance to an admiration of the hustle and an enthusiasm for all the enthusiasm, which has dovetailed perfectly with the new laissez faire. The more Wild West the business environment, the more the hustler is elevated to folk hero or legend, much the same way that the robber barons once were.”

What distinguishes aggressive marketing from a con artist is intent. A revenue-driven marketer who lacks moral scruples meets the criteria for the archetypal con artist.  Companies should care about how they generate their revenue. So should the people who work for and support those companies. In the meantime, watch out for more Billy McFarland’s breathlessly hyping their digital snake oil online, and for more Fyer Festivals.

After the Festival debacle, Ja Rule, McFarland’s business partner, reportedly said in a Fyre Media Company meeting: “That’s not fraud, that’s not fraud . . . False advertising, maybe – not fraud.” Three denials in the same sentence – a scammer’s telltale tic. Lefty couldn’t have expressed it any better.

Disobedience: A How-to Guide for Managers and Employees

Somewhere, a manager just ordered an employee to take a questionable action. To do something immoral or stupid. Something that causes harm to customers. There – it just happened again! In less than the time it takes to read this paragraph. Relentless wrongdoing. It happens all over the world.

It was a demand to ignore a customer’s legitimate complaint. An instruction to deny a refund when it was owed. An assignment to use big data to exploit vulnerable customers. A request to physically remove a passenger from an airplane because his seat was needed for someone else. “Follow the rules. Your job depends on it.”

The rule-following edict is a painful artifact of an abiding corporate culture that champions profits uber alle. Millennials, listen up: free thinkers are an impediment to efficiency. They don’t mesh with our manic, bottom-line obsessed business environment. “Objections are a luxury. We have a quota to meet, and there are only so many hours in the day.”

Tell that to the management of United Airlines, who are suddenly scratching their heads, wondering how to foster employees with less malleable backbones. Employees who don’t tremble when saying, “maybe we should consider another approach . . .” Good luck with that. The company just spent decades beating their employees into supplication.

When videos such as Dr. Dao’s violent removal from United Flight 3411 go viral, pundits echo the same three conclusions:

1. The corporate culture of the offending company is toxic,
2. There’s too much insistence on sticking to policy,
3. Employees need to be allowed to use their own judgement

If you’re looking for epiphanies, I suggest not reading any blog titled, What United Did Wrong. By now, we know. And among the “fixes,” you’re guaranteed to find employee empowerment, or some derivative of the idea. Hooray! Embedded in an Official Corporate Apology, we can expect a well-crafted sentence that contains the phrase, “our employees are now empowered to . . .” [Interesting note: that phrase – in quotes – received 175,000 search results].

When all else fails, try empowerment. We’re about it hear it like never before: Employee empowerment – or rather, employee empowerment! – get on the bandwagon now if you need a panacea for misguided corporate goals, bad policies, and ambiguous instructions! If only correcting scandals, scams, and commercial transgressions were that easy. Au contraire! Righting wrongs is not like flipping a switch. Or perfunctorily telling employees, “you are now empowered to . . .  Now, let’s get on with business as usual . . .” Alas, empowerment is never one-and-done.

In the context of an enterprise, empowerment, defined as authority or power given to someone to do something, is more a process than a word. For employees, empowerment assumes the ability to disobey immoral orders. I’ll go further: it imparts an obligation to do so.

To understand the complexities of this idea, I’ll revive a 1961 experiment by Yale professor Stanley Milgram, who wanted to learn whether men of various backgrounds would administer an electric shock to a stranger when asked by an authority figure to do so. The experiment resulted in 64% of the participants obeying the order, and 36% refusing. At the time, Milgram’s experiment concluded that there was no factor – demographic, age, occupation, marital status – that predicted whether a given person would be an order follower or resister. Not a comforting insight.

Fast forward to 2017. University of Virginia professor Bidhan L. Parmar conducted a new analysis on Milgram’s data, and he discovered heretofore unknown commonalities within the two groups. According to a February, 2017 article, Remove the Blinders: How to Disobey Immoral Orders, “After reviewing more than 1,000 pages of audio transcripts from the experiment, Parmar noticed subjects who ultimately disobeyed demonstrated distinctive speech patterns. They tested their assumptions, exercised “moral imagination” and speculated out loud about the consequences of their actions. (“Suppose he gets all these wrong, and I get up to a level where it’s going to be extremely painful?” asked one resistor.) The resistors were also quicker to personalize the issue and made more “I” statements. Said one resistor, “I can’t keep doing this to him” while another noted, “I don’t think I want to be part of this any longer.

“On the flip side, subjects who obeyed showed different verbal patterns. They dug into the procedural details of the task, which was to read word pairs and administer a shock if the unseen person could not correctly associate them (typical comments included ‘Do you want me to read these  fast or slow?’ or ‘Do you want me to write down the ones he gets wrong?’) The obeyers kept moral blinders on and read out word pairs, even as the ‘shocked’ person cried out.” (Note: nobody was physically harmed in the experiment. Milgram used actors as subjects, and the cries were recordings that were not created under duress.)

Parmar’s conclusion: “Resistors developed a moral understanding by asking questions, speculating and empathizing with “I” statements. Ultimately, they were able to override the authority’s instructions and make their own judgments.” Creating that outcome requires more – way more – than simply telling employees, “you’re empowered to . . .” Putting Parmar’s discovery into operation takes fortitude, planning, coaching, and – most important – giving employees room to question management’s requests, and to discuss their concerns. When executives cop an attitude that their policies are sacrosanct, when they lose ability to see wisdom from anyone other than peers, you get Dr. Dao bloodied while being dragged from his seat. That, and many, many lesser-known incidents resulting from the same hubris.

“In daily life, most people face choices in which there is a lot of ambiguity and the ‘problem’ isn’t always apparent,” Parmar says. “All of us are embedded in environments where we get conflicting orders, and often it’s not obvious what the right thing to do is.”

To boost the chances for employees to voice conscientious objection, Parmar recommends that managers should:

• Seek out dissenting views on key issues.
• Question routine actions: Ask why something needs to be done (or not) and what purpose it serves.
• Speak up when business imperatives conflict with personal morals.
• Protect those on your team who ask questions.
• Consider data from multiple angles.
• Make ethical reflection and discussion a regular part of team work sessions: How does our strategy affect customers, community, employees, the environment? Who might gain under this plan? Who might suffer?

Disobedience. Today, calling it moral imagination makes it sound more productive. That will keep the C-Suite happy. But it also might be the best liability protection a company can have.

Personalization: Gateway to Dystopia

Back in the ‘90’s, Robert, a project manager at a systems integrator, asked me for some technical guidance about automated identification. “I want to track people,” he said. “Basically, I want to know when a person enters a room, when he exits, when he’s out in the hallway. Wherever a person is, I need to track it, and to know.”

“That sounds like a prison!” one of his colleagues quipped. The colleague was right. Robert’s client was a correctional facility, and the need was not trivial. Robert shared many reasons for keeping tabs on an inmate’s whereabouts, 24/7. To achieve his goal, I helped him cobble a network of barcode printers, scanners and other devices. In the 20 years since, technological advances and the IoT (Internet of Things) has immensely simplified this task, making it both inexpensive and quick to deploy. I predicted this. At the time, uses for RFID and related technologies were rapidly expanding. I also anticipated that consumers would similarly become coveted targets for surveillance. But in my wildest imagination, I never expected how compliant they would be in allowing others to monitor them.

Surveillance carries a sinister ring, unless, I suppose, you’re a professional spy. Understandably, marketers skate around the term whenever they create ads, web pages, press releases, and other content. Fortunately, they can substitute a related word, one that’s friendlier, with proven sales mojo: personalization. In a digital economy, that helps clear the path to the crown jewels of marketing: detailed personal records.

The sales speil for Ocean Medallion, a new wearable offering from Princess Cruise Lines, gets an A-plus for cleverness. “You don’t need to introduce yourself to your Ocean Medallion Class ship; it knows you already. Your crew? They answer your requests before you even ask them. We’re giving you more than elevated personalized service; we’re creating personal moments.”

Providing personal moments for passengers doesn’t happen without surveillance and amassing a trove of valuable personal data, and other information. Princess has invested accordingly. To track its Medallion-wearing guests, Princess equips its vessels with around 7,000 sensors. What do these sensors sense? Well, remember the prison example I mentioned. Then, let your imagination soar!

Thanks to Sting, a darker, more poetic way to express the same idea:

Every breath you take/
Every move you make/
Every bond you break/
Every step you take/
I’ll be watching you

Personalization involves feeding a ravenous data engine, and sensors provide much of the input. The output cascades through colorful displays. Throughout every Medallion-equipped ship, Carnival has strategically positioned 4,000 15” plasma screens to push personal messages to passengers. “Hi Candace! Karabela dresses are now 25% off in the women’s boutique on D-Deck.” Candace receives this information because Princess knows about her buying habits, including when she’s likely to purchase what. It also helps that Princess owns an archive of her activity since the start of her voyage, and an algorithm knows that every day around 4 pm, Candace wanders to the bar on D-Deck, ambling right past the boutique. Ka-ching! “Imagine how many more margaritas, massages and shore excursions [the company] will sell by making it so simple to book by using a Medallion on your wrist that unlocks personalization for you everywhere,” Chris Peterson wrote in a blog, 5 Things Retailers Can Learn from Booking a Smart Cruise.

Indeed. For Princess, research about individual customers starts before they embark. Thanks to social media, Princess has a ready-made repository of fungible insight. “The goal of pre-planning is learning more about our guests,” said Michael G. Jungen, Carnival’s Senior Vice President of Experience, Design and Technology  (Carnival is a Princess brand). According to a New York Times article, Coming to Carnival Cruises: a Wearable Medallion That Records Your Every Whim, (January 4, 2017), Jungen “noted that passengers would have the option of linking their medallions with social media accounts, allowing Carnival to delve even deeper . . . As Carnival designed the Ocean Medallion system inside an unmarked building here in suburban Miami, it built a replica set of staterooms, corridors and other ship facilities to test concepts. Scribbles on a monumental white board in one area contained algorithms and personalization ideas.” Examples: when you eat dinner and what you watch on TV. More? . . . Oh yeah!

Jungen and colleague John Padgett, Carnival’s Chief Experience and Innovation Officer, brought their CX and data collection skills from Disney, where they developed a wristband system called MyMagic+. Disney invested over $1 billion in the project. “The ultimate goal here,” Padgett said, referencing a Disney aphorism, “is to delight and surprise our guests.” He makes a good point. Cruise vacationers like to feel pampered. They want special seats in restaurants. They want food brought to them whenever and wherever they are. They don’t want to stress about knowing where their kids are on a massive ship. Wearable guest-tracking devices make these perks possible.

Carnival, and other companies that collect and store large amounts of customer information, explain that their motivations are benign, and that their intent is to provide consumers unprecedented conveniences and outstanding experiences, or CX. That may be true, but it’s not the full story. The same detailed digital customer profile that enables the bartender to custom-pour Candace’s Negroni also feeds finely-tuned algorithms that are superb at separating her from her money. That includes long after the cruise ship returns to the dock. For Carnival, Candace’s digital profile is a cash cow that keeps on giving. Little wonder that Carnival would like every passenger to wear an Ocean Medallion. They just don’t divulge ongoing cash flow and data monetization among the reasons.

Customers should consider what they sacrifice to experience those personal moments. With wearable devices, it’s no longer theoretical to ask which intimate details can be captured and recorded. The correct question to ask is not, “why would a company want that kind of information?” but rather, “what’s stopping them from getting it?” With over 7,000 sensors aboard a ship, I suspect very few people know where all of them are placed, or what activities they monitor. I’d start with the stateroom.

In 2012, President Obama said that “companies should present choices about data sharing, collection, use, and disclosure that are appropriate for the scale, scope, and sensitivity of personal data in question at the time of collection.” In other words, businesses should tailor privacy rules to the data itself. But when I visited the Princess website, I did not see any disclosures or policies specific to Ocean Medallion. And their latest privacy statement was updated in December, 2014, before Ocean Medallion was introduced. “Some data collected from wearables may be relatively trivial, but other data can be highly sensitive,” said Kelsey Finch, Policy Counsel for the Future of Privacy Forum (FPF), which has published a paper providing recommendations for wearable privacy practices.

Before donning an Ocean Medallion, or other wearable device, what should consumers want to know? The US Federal Trade Commission offers sensible guidelines for companies to include in privacy statements:

• identification of the entity collecting the data

• identification of the uses to which the data will be put

• identification of any potential recipients of the data

• the nature of the data collected and the means by which it is collected if not obvious (passively, by means of electronic monitoring, or actively, by asking the consumer to provide the information)

• whether the provision of the requested data is voluntary or required, and the consequences of a refusal to provide the requested information

• the steps taken by the data collector to ensure the confidentiality, integrity and quality of the data

And I’ll add a couple of my own:

• How long will the data be retained?

• How will it be protected?

For now, these guidelines unevenly used – if they are used at all. And I’m not bullish that consumers will demand that companies adhere to them. There are two reasons: first, I don’t think consumers care. Many are digital natives who are jaded about digital surveillance. And thanks to clever marketers, the “wow!” of personalization – like having a waiter just hand you your favorite drink whenever and wherever you want – supersedes consumer concerns over data governance. Please – the next type someone spouts hype about customers having all the information power, remember Ocean Medallion.

Second, Congress just emasculated the already-weak consumer protections regarding data privacy. If Trump signs the joint resolution of congressional disapproval, Internet providers are free from any obligation to get a consumer’s approval to “share or sell things such as your geolocation, your children’s information, your financial information, your Social Security Number, your browsing history, your app usage history, or the content of your message data plan . . . Internet providers will also be free to use customer data in other ways, such as selling the information directly to data brokers that target lucrative or vulnerable demographics”, according to a March 29th Washington Post article, Congress Pulls Plug on Internet Protections.

You’ve probably gathered from my polemic that I’m not a good prospect for Princess or Ocean Medallion. You are right. But if I became their customer, I suspect Princess could quickly learn more about me than maybe I even know about myself. Thanks to Congress, all it now takes is transferring personal data from my Internet Service Provider, blending it with Ocean Medallion’s personalization data, and voila! – digital gold! The worst part (or best part, depending on your perspective): no consumer disclosures are required. A chilling thought that signifies how many more miles we’ve traveled on the road to dystopia.

Surveillance enables personalization, and personalization brings customers personal moments. But those wonderful times won’t be free, and they won’t give people freedom. Being watched never does. There will always be more personal details revealed, and an accompanying monetary transaction.  Personalization delivers marketers an unprecedented ability to know customers intimately, and to hone how they sell to them.  That should give every consumer momentary pause.  Meanwhile, expect vendors to continue hawking the wonderful CX that personalization enables. For them, the value of what customers so willingly sacrifice is incalculably high.

Wells Fargo Disinfects Its Sales Culture. Will Other Companies Follow?

I’ve never taught corporate strategy to second graders, but I sometimes think about how to approach the challenge. I’d begin by representing a company as hodgepodge of contraptions. Maybe, a school bus with feathered wings on top, a boat anchor dragging behind, and wheels of various sizes and materials randomly positioned underneath. “Pretend this is a company. How far do you think it could go? Would it sink or crash? Can it reach Profit Land before everyone jumps off?”

Or, maybe I’d just give the kids a dark, real-world example. Say, Wells Fargo, circa 2016. “The top executives are bullies who believe rules don’t apply to them. They scare the sales staff on purpose, and they tell them to lie to customers – all so the stock price will go up! That way, the executives can get paid lots and lots and LOTS of money!”

I envision an eruption of giggles and laughter. “That’s dumb! And it would NEVER be sustainable, silly!” Every corporate board needs at least one seven-year-old to call out the obvious.

Wells Fargo wants to change that narrative. In the wake of their recent scandal, the company replaced its senior management, and announced its intention to disinfect its infamous sales culture. That effort began in January through a new compensation plan for employees, and success measurements that reflect customer value delivered. Wells Fargo employees will say goodbye to “stretch” goals, low base pay, individual bonuses for entry-level sales employees, and onerous demands to open new customer accounts. They will say hello to higher base salaries, less variable pay, and team incentives. Yes, you read that correctly: team incentives. No more divide and conquer as a daily tactic for employee intimidation. And, probably less employee intimidation, too.

You won’t find “salesy” behavior here! Under the new management regime, Wells Fargo will monitor growth in the number of customers who rely on the bank as their primary financial institution. And branches will be measured on customer retention. Meet the new Wells Fargo, where consumer bankers, loan officers, and financial planners cooperate, collaborate, and support one another. Go team, go!

Wells Fargo’s new plan “will focus on customer service, customer usage and growth in primary balances,” Emily Glazer wrote in a Wall Street Journal article, Wells Fargo to Roll Out New Compensation Plan to Replace Sales Goals . These new objectives are light years from what they were less than one year ago, when the company’s goals included having every customer hold eight accounts, even if it meant browbeating the sales team to open accounts surreptitiously. And by browbeating, I mean threatening to ruin careers for noncompliance, then conspicuously enforcing the threat.

Such reforms are instrumental for building an ethical culture, improving customer experiences, and keeping customers happier, longer. By forgoing an aggressive sales environment with harsh punitive measures, Wells Fargo can also close the chasms between their written Corporate Vision and Values, what their employees do in the field, and how management recognizes and rewards their efforts. Can is the operative word. It won’t happen automatically, and it won’t occur overnight, but I predict for Wells Fargo, the outcome will be greater revenue, profits, and higher investor returns over more quarters. And for the same reasons, Wells Fargo’s customers will feel good walking into a branch and talking to a banker who now is far more likely to have benign intentions. That’s huge, and it doesn’t happen on its own.

These changes seem so pragmatic and sensible that I’m surprised they are not more widely adopted. But in the sales world, they compare to a diamond in the rough. Similar initiatives are rare, so whenever you discover one, savor it by examining it closely. One of my clients, a global cloud software developer, deviated from a widespread industry practice that provides reps commissions on seats sold. Instead, my client’s plan compensates reps not for seats sold, but for usage. They go even further. Their plan penalizes reps for dormant seats. The reason? Nothing puts a vendor in a financial buyer’s crosshairs more than writing checks for stuff that nobody uses. “I see we’re paying Squishysoft $400,000 every month for supply chain software that only 10 of our employees log into daily. They told us we’d save money by going to the cloud!” No vendor wants that conversation taking place in the buyer’s offices. My client was shrewd in recognizing the risk lurking in an attractive revenue stream, and they mitigated it through their pay plan.

Some might dismiss Wells Fargo’s new sales strategy as an obvious choice to restore customer and employee trust. No doubt that’s a motivator. But I think their kinder, customer-centered selling approach is an astute competitive maneuver, and long overdue in revenue strategy.

Why does Wells Fargo today appear at the vanguard for a sales model that should be commonplace? I don’t know. But I have a theory that specific forces impede companies from jettisoning practices that consistently antagonize and alienate customers and employees:

1. Demands on CXO’s to grow shareholder value. For the investment community, stock price and potential revenue growth are connected. Unfortunately, many senior executives operate under the misguided notion that growing shareholder value is not only their primary responsibility, but an obligation. In turn, their demands for short-term revenue growth seeps into selling strategy, undermining the delivery of longer, more sustainable value to customers.

2. Sales managers today are unable to adapt to evolving needs, because they began their careers in “revenue-driven” organizations. Customer loyalty, customer retention, and user satisfaction have emerged as value drivers for vendors. But sales managers are slow to change their expectations, along with their coaching and mentoring.

3. Many outside the sales profession stereotype salespeople as “thriving on pressure.” As we learned from Wells Fargo, they can also be sickened by it. Accountants, lawyers, and logisticians don’t thrive on pressure any more than salespeople do. But for salespeople, the stereotype leads to dysfunctional pay policies and incentives.

4. Hiring managers still believe money-motivation as integral to selling success, and strategies are built around that assumption. Further, firms that provide psychographic testing for sales candidates perpetuate obsolete traits deemed essential to a “sales personality.” But these were formulated at a time when “individual contributor” was a synonym for “salesperson.” That doesn’t cut it today. Yesterday’s competencies won’t fill tomorrow’s sales needs.

5. In many organizations, sales operates as a stand-alone entity, with procedures, goals, targets, and objectives that are disconnected from other parts of the organization. By contrast, Wells Fargo has developed a model built on collaboration and goal congruity between departments.

Wells Fargo’s new sales culture is a risky move, but if successful, it will be a powerful competitive differentiator. Much can go wrong. Will a company with a heritage of individual revenue production make a successful conversion to competing as a team? Will the new customer retention measurement backfire? For example, what will happen when a customer wants to close an account because he’s combining assets with his fiancé’s at another institution? Will he encounter a gauntlet of red and gold-clad bankers hellbent on preventing that from happening? By now, Wells Fargo’s management knows about Comcast’s retention debacle. Will they commit the same error? The answer depends on how tightly Wells Fargo adheres to its Vision and Values, the incentives it provides to its sales force for meeting goals, and the penalties it metes out for failing.

I applaud Wells Fargo’s board for addressing a daunting selling challenge, and for setting a worthwhile example that others should follow. For many, the concept of paying team bonuses and rewarding reps for outcomes tangential to direct revenue production might seem as heretic as NASCAR including fuel economy and safe driving as additional criteria for who wins a race. But promoting positive customer outcomes and fostering ethical practices requires companies to change the strategies underpinning their business development activities. And that means reforming sales pay and incentives.

If you need advice starting out, ask a second grader: “When a person buys something they should feel good. And they should always be happy that they did, because that will mean the person did a good job deciding, and the person who sold them something did a good job, too!”

Thanks, kid. You have a great future in business development. I know you’ll go far.

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