First Coffee for October 11, 2005

David Sims : First Coffee
David Sims
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First Coffee for October 11, 2005

By David Sims

The news as of the first coffee this morning, and we’re taking a break from Frank Sinatra with a CD of Texas country drinking songs. The current one’s “Una más cerveza” by Tommy Alverson, next up’s “One Bud Wiser” by John Rich: “Well I’m one Bud wiser/ Than I was a minute ago…”

Siebel Systems, Inc. is announcing the launch of the “CRM Index” for small and medium-sized businesses. It’s based on data from independent research conducted by Datamonitor, the findings of which are published today as a report titled “Going for Growth: Are European SMBs Ready to Meet Customer Demands?”

The CRM Index will provide ongoing performance metrics for this market, according to Siebel officials, and is supposed to be an online tool that “enables SMBs to understand and measure how well they attract, manage, and service their customers,” as it’ll allow benchmarking of CRM, initially against 1,000 other companies.

Siebel officials describe the purpose as being to let SMBs measure how their organization performs overall or specifically how its sales, marketing, or service functions rate against the industry standard. Once the results are assessed, the CRM Index provides a personalized summary and advice guide, as well as a library of best practices for SMBs to improve their CRM effectiveness.

First CoffeeSM will spoil some of the surprise now: The results of the survey underscore that while small and medium-sized businesses are focused on growth, “they are failing to maximize revenue from existing and prospective customers.”

Almost half of SMBs, 46 percent, Siebel official say, cite “growing revenues” and “maximizing margins” as their top business objective. Hence more than half of European SMBs are investing in some kind of customer management tool to help them retain and attract customers to fuel this growth, be it basic contact management to track customers, or simple databases.

However, in many cases “SMBs are not using these tools to implement customer service principles across all the relevant departments within their organization.”

A finding Siebel officials think is particularly pertinent is that “80 percent of requests for an e-mail response to a phone inquiry are never sent, and 57 percent of SMBs have no time targets for responding to customer inquiries. When it comes to human interaction, 31 percent of European SMBs do not have a dedicated customer point of contact.”

European SMBs are also ineffective at measuring the impact of their sales and marketing investments. Only 41 percent of the organizations surveyed are tracking how much they are spending on marketing versus the impact of these expenditures on revenue and customer growth. Fifty percent of European respondents are also not tracking the performance of sales individuals, meaning they are unable to identify stronger versus weaker performers.

“It only takes one unanswered phone call or e-mail for a prospective customer to go elsewhere, and when you’re focused on growth, each and every customer can be crucial,” Neil Morgan, Vice President of European Marketing, Siebel Systems warns.

And here’s a truth both the New York Yankees and Boston Red Sox learned in the past week: Money doesn’t buy results.

There is no direct relationship between R&D spending and significant measures of corporate success such as growth, profitability, and shareholder return, according to a new global innovation study by management consulting firm Booz Allen Hamilton.

However, the pace of corporate R&D spending continues to accelerate as fast as the New York Yankees’ payroll, as many executives continue to believe that enhanced innovation is required to fuel their future growth.

Booz Allen analyzed the world’s top 1,000 corporate research and development spenders to “identify the linkages between spending on innovation and corporate performance, and to uncover insights on how organizations can get the greatest return on their innovation investment,” according to firm officials.

They found that money doesn’t buy results: “While the study identified individual success stories, there is no discernable statistical relationship between R&D spending levels and nearly all measures of business success, including sales growth, gross profit, operating profit, enterprise profit, market capitalization, or total shareholder return.” Hiring a management consulting firm, the results imply, is a great way to start spending.

The top 10 global R&D spenders in 2004 were – in descending order – Microsoft, Pfizer, Ford, DaimlerChrysler, Toyota, General Motors, Siemens, Matsushita Electric, IBM, and Johnson & Johnson.

R&D spending is heavily concentrated in the Technology, Health, and Automotive sectors. Computing & Electronics tops the list representing 25% of total spend by the Global 1,000; Health follows with 20%, and Auto with 18%.

And the annual growth rate for R&D spending from 1999 to 2004 in China and India was 21.1%, significantly higher than in North America (6.6%), Europe (6.2%), and Japan (4.8%). These lower growth rates are likely functions of the relative maturity of companies in these countries and the magnitude of their current spending.

However, the developed economies show a higher ratio of R&D spending to sales. Here China and India lag, spending only 1% of revenue on R&D, compared with 4.9% for firms in North America, 4% in Europe, and 3.8% in Japan.

Interesting announcement from Intercasting Corporation, which bills itself as “the first Location-Aware Media Networking Operator.” Seems that several alternative and hard rock record labels have joined the Rabble community.

(“Weren’t they already?” She puts her bone china cup back on the Reed & Barton silver tea service and rings for the butler.)

Rabble’s a mobile blogging application for cell phones, which lets users create, publish and share media and connect with others based on proximity or areas of interest. Music labels including Nitro, Sub Pop and Trustkill Records are now using Rabble to connect with fans across the country.

Verizon Wireless customers with select Get It Now-enabled phones can sign up for Rabble to create and distribute their own content and connect with others via an interface right on their mobile. Be your own media producer, kids.

“We noticed a few independent bands using Rabble to connect with their fans so we reached out to some of our favorite music labels, Sub Pop, Nitro and Trustkill,” said Derrick Oien, founder and President of Intercasting Corporation. Oien said many of the labels already make heavy use of Internet sites like MySpace and Pure Volume.

So if you want to be one of the thousands messaging AFI or The Offspring, Rufio, The Aquabats, A Wilhelm Scream and The Letters Organize, or Sleater-Kinney, The Shins, Postal Service and Rogue Wave, or Fight Paris, Roses Are Red and Bedlight For Blue Eyes, check it out.

“Direct contact with fans has always been essential for any indie label. The new challenge is competing with the bombardment of information that our audience gets from so many different sources,” said Jerod Gunsberg, Head of Sales and Marketing, Nitro Records.

“I love the idea of giving fans the ability to build their own communities revolving around music. It’s a great opportunity for us to just provide the access to music and information and then allow the fans to align themselves organically around the artists that they actually care about. To me, that’s infinitely preferable to trying to force our artists on audiences through fixed marketing channels,” said Dean Hudson, Sub Pop Records Director of New Media.

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