Full Circle’s 80-20 Rule

I recently talked with Bonnie Crater about changing her company’s name, and something really struck home. Crater is CEO of Full Circle Insights, and I’ve known her since her days as an executive at Salesforce. I have followed her startup’s progress almost since day one.

If you don’t know, Full Circle Insights previously was known as “Full Circle CRM,” but the company focuses on marketing performance management, not the full spectrum of CRM, so the name change made sense.

As I was listening to Crater, I recalled that old aphorism, often attributed to John Wanamaker, that half an advertising budget is wasted, but we just don’t know which half. For a long time, all we could do was chuckle at the wisdom of the saying with a dubious feeling of helplessness. It never feels good to know that half of anything is wasted, after all.

Improving Accountability

At least modern marketers don’t have that 50/50 problem today — or at least they shouldn’t. In Crater’s formulation — and this is what caught my attention — 100 percent of the budget should be accountable, and 80 percent ought to be going to proven programs and ideas.

Her most interesting point, though, is what happens to the last 20 percent. That last 20 points ought to be going to experiment. That’s right. If you don’t run any marketing experiments, Crater says, “how can you improve?”

This is generally in line with my observation that we have a new science for the front office, which I refer to as “customer science.” Science and experimentation go hand in hand, and customer science borrows heavily from sociology, a social science.

Customer science tries to unravel the reasons that customers remain loyal and why they go away, and using marketing performance management is one way to identify the structures that customers want to stay with, as opposed to seeking their solutions elsewhere.

Reducing Waste

The experimentation Crater describes is really a systematic approach to concretely identifying both structure and agency — at least from a marketing perspective. Customer science applies to other areas of CRM as well, though the approaches in service (but not the methods) might differ.

Needless to say, I am a fan. Our older approaches to understanding what works in marketing go back to the aforementioned Wanamaker’s observation, and they are extremely wasteful.

Do you know what else is wasteful? Simply plowing through a pile of data with powerful technology looking for shiny objects. Not only is it wasteful, it lulls us into thinking that we’re doing something useful or even scientific when all we’re really doing is applying a great deal of technology and money in an attempt to solve an old problem in an old way.

I like experimentation for its formality and its requirement that we ask questions that can be answered clearly in either the affirmative or the negative. In an experiment, a no is as valuable as a yes, because it helps sharpen the investigative effort and because it is unambiguous.

That’s what we need more of in front-office business, so that we can reduce wasted time, money and other resources.

Denis Pombriant

Denis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at [email protected]. You can also connect with him on Google+.

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