Editable Google Slide (CC-BY-4.0)
Imagine you are an owner of a small restaurant.
One day a guy walks in and orders a soup.
Here are 3 horizons (circles) for you to think about the value of this person for your business:
- This guy is going to pay me 10 bucks, but my total costs to make and serve the soup are 8 bucks, so I’ve just made 2 bucks. Cool!
- According to the above I’ve just made 2 bucks, but if this guy likes the soup and he is a local, he can come for lunch every day for the coming 45 years. That’s a fortune. Awesome!
- 45*365*2 = 32850 bucks that I’m going to make in profits from this guy (forget inflation for a second). Now what if on top of coming every day for the next 45 years, he also wears our branded T-shirt and tells all his friends & colleagues at work to come try our soup… 100 of his colleagues, coming for lunch every day for the next 45 years and telling their friends in turn… – that’s too many zeroes to count. Unbelievable.
The example is oversimplified and unrealistic, but you get the point.
What’s interesting is that the 3 horizons would urge you to do different things (e.g you may want to suggest this guy to try your not-so-good-cake for dessert if you only think of the guy’s value on the 1st horizon, but you won’t do so if you think further).
Another interesting thing to point out is that while the first horizon is a reality, the second and third are chances. This guy may be a tourist flying out tomorrow. This means that investment, aimed at maximizing the value beyond the first horizon, will only work at scale.
In any case, we believe that many businesses (especially in the retail sector) pay too little attention to the 2nd and 3rd horizons focusing all their efforts on the 1st. Shelf design and trade marketing is generally the investment in maximizing the 1st circle of value. CRM and Social CRM would be investments into 2nd and 3rd. But how many retail businesses do you know that focus on those things properly?
We live in the age when, thanks to technology, not only Wanamaker’s problem can be solved, but also you can easily know exactly which 20% of customers generate 80% of your profits. Unfortunately CRM (not to mention Social CRM) is still (with rare exception) too hard for retail businesses to grasp and execute upon, so they continue to rearrange shelves, chasing the first horizon, while the second and third are left to chance and hopes for great TV commercials magically creating loyalty and buzz.
We hope one day, somebody finally makes it easy for businesses to connect and stay in touch with their customers in a simple, smart & responsible way, maximizing long-term value for everybody involved.