Time and distance provides perspective.  During the transition period to BCG, I have been writing down some of the lessons from my time at NCI, especially the last 2 years as we were sailing into the teeth of a storm (a metaphor that I will get back to shortly).  In this post, I will focus on what I believe we did right, even though the outcome of NCI facing a restructuring was not what anyone wanted to see.

First, the metaphor.  I have read a lot about daring people, fastidiously preparing for the fight of their life, knowing the likelihood of a grim outcome.  Like, when I was a kid, the story about the army ants preparing to overrun the plantation and when I was a bit older climbers stranded in the wilderness and as an adult explorers facing racing to the South Pole with only what they had aboard their sleds as resources.  In all of these accounts, the protagonists ignored the likely outcome and set about applying every tool/asset they had to try to solve the massive problem.  At NCI, we saw this storm coming from miles away – knew it was massive and went about preparing our business as best we could to survive it.  The company’s equity survived a long time, all things considered, and the core assets survived to “fight another day”.

Here is what I take away:

1 – Know your exposure points and measure them frequently. We knew that NCI was overly exposed to residential real estate from long before I joined the company.  In 2005, we put together a study to see how correlated revenue was to home sale price, home sale volume, and average time on market.  We knew that we were (a) highly uncorrelated to historical price fluctuations (but we had never seen a price move of the magnitude that the market ultimately experienced), (b) highly correlated to historical volume (our business was best when lots of houses were selling) and (c) we were confounded by turn (homes turning too fast meant lower ad spends, homes turning too slowly also meant lower ad spends – there was a sweet-spot of months on market).  As the residential market fell off of its cliff(s), we were able to anticipate revenue losses and stay ahead of them with cost take-outs.  We monitored the key macro and market level data to make these cut decisions and did not wait for losses to mount.

2 – Don’t deviate from the core framework of the business. A significant chunk of NCI is run by 300+ Independent Distributors who have the exclusive license to sell The Real Estate Book in their territory.  We had a simple framework for decision making that we were able to maintain, even in the most challenging times.  First, make sure our advertisers (customers) are making money, and then make sure that our Independent Distributors are making money (channel), and finally make sure that we are making money.  While we shifted resources to markets with greater short term opportunity (Apartment Finder), we never reversed the order.  We held the firm belief that the macro forces of immigration, population growth, household formation and the need for housing would ultimately drive the residential real estate market back to equilibrium (dependent on jobs growth), and that so long as we were able to keep that decision framework, NCI would be able to participate in the recovery.  Note – there is nothing in the framework that dictates product formulation, pricing model, positioning, etc.  NCI has been able to stay active and involved in most of its markets by maintaining this perspective.

3 – Use every tool at your disposal to optimize your cost structure. I recently sat in on a BCG update on “Hot Topics for the IT World”.  While NCI was facing massive revenue declines, we were testing every method for driving costs down and were early adopters of many of the key trends identified in the BCG update:

• cloud computing,
• enterprise 2.0 tools,
• social media marketing,
• global sourcing,
• use of open source code,
• enterprise data mash-ups,
• data intensive analytics

Back to the metaphor.  We tried these things to “tighten the rigging” on our ship.  We had no misconception that more efficient innovation, lower cost development, lower cost infrastructure or even new product development and new revenue sources would be enough to counteract the magnitude of the residential real estate meltdown, but we did it anyway.  We knew that if the storm continued to get worse, the debt would need to be restructured – but we did the right thing by using these leading edge capabilities to take cost out.  No one “went below deck” to hide and ride things out.

4 – Continue open and frank communications. I don’t remember a moment when we sugarcoated a message.  Dan continued to hold quarterly “State of the Business” updates, with good and bad news in black and white.  Everything was out in the open.  This permitted us to make very tough decisions about resource allocation without creating mass confusion for our employees.

5 – Constant culling of the portfolio. While there is some interconnectedness between markets and products within the NCI portfolio, we were constantly evaluating each one of these elements and made tough calls with regard to resource allocation as well as market closures.  We did not have extra cash flow to support unprofitable markets that did not have a near term, realistic opportunity to reverse the trend.  Again to the metaphor, we had finite resources and needed to constantly be performing triage.  Giving too much to save a troubled market would leave too little to support those with growth prospects.  With the “never say die” attitude that pervades NCI, this proved to be one of the toughest problems to solve.

My family is dealing with a lot of bittersweet right now.  It turns out, bittersweet is underrated.

Sammy is changing schools for 5^th grade.  We loved Rodeph, it was nurturing, well structured and rigorous – the educational foundation was excellent.  Sammy has great friends there and we love the community.  Unfortunately, the school only goes to 8^th grade, so we needed to make the switch sometime.  We applied to what has long been our first choice for Sammy – an amazing all-boys school in our neighborhood.  We were thrilled when he was admitted to Collegiate.  The school gives Sammy the chance to grow, expand his independence, and explore academics, arts and athletics in greater depth than Rodeph could offer.  We loved Rodeph and owe the faculty, staff and families a true debt of gratitude.  In this case, bittersweet feels great.  We had an amazing experience, and I would not change anything about the years we spent there, at the same time we are excited for the next chapter.

I am facing the same emotion with my career.  I have left NCI and am joining Boston Consulting Group.  Again, bittersweet.  NCI was a great place for me.  I had a chance to work with people I trust and enjoy.  Dan McCarthy, the CEO at NCI, has been a mentor to me since we first worked together in 1998.  Dan and I have been great partners at both Primedia and now at NCI.  I have tremendous respect for him, his loyalty to NCI, his vision and his leadership.  Gerry Parker, the CFO, is a straight-shooter with an amazing grasp of the macro and the micro (Gerry seems to remember every bill ever paid by NCI).  Gerry has great judgment, an extremely even keel and the ability to guide the organization in growth and in decline.  I will sincerely miss working with Dan and Gerry.

At NCI, we had the opportunity to be resourceful, aggressive, move fast and do things most of our competitors were unwilling to try.  I had the opportunity to work with a team who had a bias for pace and execution that continues to amaze me – in fact part of the bittersweet nature of the departure is leaving the Interactive team and the By Design Publishing team in such capable hands.  I know that TJ, Scott, Belinda and Teresa are up to the task and have developed great decision making frameworks to drive the business in the right directions.

In moving to BCG, I had significant time for introspection.  I know what I excell at, and I know what I love to do – I love solving tough problems, I love analyzing complex situations, I love working with smart teams, I love finding the creative solution.  I had worked with the BCG guys when I was at Cendant and was impressed by the team, their approach and their work.  I am truly excited for the change and thrilled to be joining the BCG NY Office.  While the change is bittersweet, I have no regrets about NCI and nothing but enthusiasm for the next chapter!

I have been re-reading The Curse of the Mogul.  It is a “must read” for media professionals.  One of the footnotes references an article that I found really interesting; All Strategy is Local by Bruce Greenwald and Judd Kahn from HBR in September of 2005.

The premise of both the book and the article is the same; strategy = finding and maintaining competitive advantage and the lack of competitive advantage requires achieving superior efficiency to retain profitability.  The HBR article goes on to show how smaller, better defined markets are easier places to find competitive advantage.  A theme that I have seen over and over again in my career.

One of the first points that Greenwald makes is that barriers to entry are easier to maintain in tightly defined markets.  This was certainly true at NCI, where great performance both for NCI and for our advertisers was almost always a function of local market competition.  A great example is the magazine, “At Home in Arkansas”.  It is a terrific producer of leads and client satisfaction for our advertisers.  It gets great reader ratings as it truly speaks to the local market and local design vernacular.  It also generates outstanding profit.  Being a tightly defined market, there can not be outsized expectations for growth, but so long as the team keeps barriers to entry high by maintaining a high quality product with exceptional advertiser returns, it can sustain that profit for the foreseeable future.

Another example comes from the Apartment Finder brand.  The Apartment Finder print product exists in markets where there are anywhere from zero to three competitors.  Almost universally, fewer competitors leads to better results – again for both our advertisers as measured in cost per lead and for NCI as measured in profitability.  NCI recognized that raising price in lightly competed local markets would invite competition entry and ultimately destroy profitability for us and destroy efficiency for our customers.

The inverse can be found on the national real estate listing sites (Realtor.com, Zillow, Trulia, etc.).  As Zillow and Trulia have demonstrated, barriers to entry are relatively low.  They have both been able to gain share of visitors over a short period of time with relatively small investments (when compared to the inception to date investment from Move.com and its “high-ground” position being the only national site with all MLS data).  There is very little differentiation among the offerings, very little differentiation among the pricing strategies and every innovation is matched tit-for-tat.  In this space, I would expect efficiency to ultimately define the winner (a pseudo-regulatory advantage granted to Realtor.com did not create enough of an advantage for sustained profits).  In this case I would look at revenue and visitors per employee or per capital dollar as the key measure to identify the future profit winners.

The biggest question that remains to be battled in this space is the impact of the national web businesses on the local media markets.  I believe that the question boils down competitive advantage.  If the goal of marketing is to stand out in your well defined local market so that you can have more than your ratable share of the profits, can locally distributed, local media be more efficient in creating marketing differentiation in that well defined geography than a national media product?  It is the same question for local radio, newspapers, magazines, direct mail, local TV buys and billboards.  So, while record stores are mostly a memory (almost all music can be purchased digitally, what competitive advantage can a local retailer provide?), no one has replaced my local dry-cleaner, my local restaurant or my local doctor (yet).

I still remember first semester at business school when my professor, Paul Glasserman, handed back the first stats test of the year and dryly said, “Remember, not everyone can be above average.” This is certainly true for Apartment Communities and lead generation – not all properties perform above average…

Averages can be deceiving and using averages to make business decisions can leave a ton of value on the table. Similarly, understanding the factors that drive the outliers in performance can create significant value. This is why there can be INCREASING return in analyzing marginally more granular data.

Before I go to the apartment data (which is very cool, by the way), here are a couple of examples from my career that reinforce the point.

When I was at Cendant and was responsible for our Membership Travel business, our cost center cost drivers were sales-per-call and “minutes per completed call” – those metrics described most of our variable cost (agent time, telephone time, etc.). When I began running the business, every decision was made on “average call time”. I don’t remember the real number, but let’s call it 12 minutes for an average sale. So, cool, if we can get some tools to make it 11 minutes or 10 minutes, that will drive profit per call. We ran with monitoring the average for a while, and then I asked to see the raw telephone switch data. One thing that leapt out at me was that there were some CRAZY long calls. No one had ever mentioned it to me, but when we looked back at reports we found that a portion of our calls, call it 10%, were what we called “Long Calls” – calls lasting 25+ minutes. Most of those calls were significantly unprofitable for us. By zeroing in on the cause of the long calls (mostly picking hotels in big cities like NYC, LA or Chicago) we could significantly reduce our cost. While the average was important, the outliers were the key lever for improved performance.

Now for the cool Apartment stuff. Here is what we know:

• Like Paul Glasserman said, not all properties can perform above average.
• At NCI we have TONS of data about how different properties perform in terms of lead generation.
• We can hire a really smart stats PhD to CRUNCH this data. (So we did)
• We can ask the question, “Why do some properties perform better than average and others worse?” Where performance is measured in leads generated.

First some descriptive data:

Our data represented more than 10,000 properties with phone and email leads generated over an 11 month period. That is tens of millions of magazine copies distributed, tens of millions of unique visitors, millions of leads.

On average (oooh, I hate that word), the properties advertised on Apartment Finder:

• Ask $844 per month in rent
• Have 964 square feet
• Have 1.8 bedrooms
• Have 1.4 bathrooms

When taking a look at the key amenities offered, here is the % frequency of each facet.

It seems that offering a pool is “table stakes” for a community.

Our analysis focused on “observable characteristics” – like asking price, the amenities offered, square footage, bedrooms, leads, etc. We know that there are “unobservable characteristics” that change these results. For example, ugly pictures hurt lead production. Being in a “bad part of town” hurts lead production.

First we asked the question – what amenities drive leads? In our first assessment we took price out of the regression. So there are two ways to read the chart. One way is to say that by offering a garage, you should expect 11% fewer leads than average and by offering a Washer Dryer Hookup, you should expect roughly 20% more leads than average. However, another way to look at the data is the signaling of price. Higher priced apartment complexes generate fewer leads than average and tend to have Garages, Fitness Centers, Washer/Dryers, etc. Most interesting is that allowing pets provides a significant lift in leads without being associated with price.

Next, we asked how does price fit into the equation. For the following chart, you can read it as “if you add a given amenity to an average property, how much can you change monthly asking rent and receive average leads ?”

In this chart, Fitness Center, Gated Community, Garage all indicate a more expensive property, where you can ask for more rent and still receive average leads. With Washer Dryer Hook-Up, you are signaling a less expensive property and need to reduce asking rent by a significant amount (more than the cost of a washer dryer) in order to maintain average leads.

We are getting close to having a model that we can run against the “observable characteristics” of an apartment community advertiser to predict how many leads that property should generate. We can then help our advertisers to understand if they are an “outlier”. If they are getting more leads than they should expect per the model, should they test raising the asking rent? If they are getting fewer leads than the model predicts, do they need to rewrite their property description or take new photos?

By helping the properties who perform below predicted lead volumes improve their “unobservable characteristics” we can help them drive their business. We believe that generating more, high quality leads for all of our advertisers will help drive our business.

In my last post about business and technology, I described the current state of low-cost, low-risk innovations that permits our company to have a “bias to test”.  We have low hurdles to try new ideas, can test them on a portion of our audience, can explicitly measure the results of the test and deploy what works.  I answered a bit about “what works” in a prior post about metric myopia.  In this world, with low capex risk, low consumer perception risk, low client perception risk, the game becomes that of metabolism.  How quickly we can evolve our products becomes our competitive advantage.

Our push right now is to keep our innovation cycle (hypothesize, test, measure, tinker, deploy or kill) as short as possible so that we can try as many things as possible.  It is a bit Darwinian, but think of each of these tests as a mutation – it either helps, hurts or is neutral.  So long as we can quickly identify and eliminate the “bad” mutations, we will be getting forever more effective.

Some tests are simple, like “does an orange call-to-action button test better than a blue one?”  Other tests are a bit more complex; “what grade reading level for our content posts drives the most engagement?”  The key here is frequency.  It is working for us remarkably well.

It is also working for Apple.

There have only been 3 releases of the iPhone so far (and one strategically dropped prototype).  But the metabolism rate of the iPhone is incredibly rapid.  The basic functions don’t change (make a call, take a picture, locate yourself, get info from the web, post info to the web…) but the apps do.

For a consumer, investing in almost all apps (with the exception maybe of TomTom), is an almost no risk proposition.  You are paying a buck or two in order to find out if your iPhone can become of greater utility than it was two minutes ago.  I have not yet seen a report of iPhone virus apps.   If the app sucks, delete it and maybe read a couple of more reviews next time.  If the app is great, it is as if you just got a slightly better version of the phone beamed to your hand.  The product is constantly evolving, being driven forward by a volunteer work force (in Apple’s perspective), constantly innovating to make a better mousetrap.

So, what are the hallmarks of a good, fast metabolism?

• low consumer cost for each incremental change
• an environment that can immediately assess good vs. bad changes
• low business risk for each change introduced (you should be more thoughtful when “betting the business”)
• have a going in hypothesis to test (otherwise, how can you tell if it worked)
• develop a bias for facts as opposed to opinions
• be happy with failed tests – if every idea is better than what you already have, what you already have can’t be very good

The iPad corollary – just because you have a product with a fast metabolism (the iPhone), does not mean you can’t benefit from quantum changes (Apple seems to be selling a bunch of iPads).  Just remember, the risk-reward profile is vastly different and requires a different kind of innovation approach.

Conversations seem to come in batches. Over the past 2 weeks or so, I have had a lot of independent discussions about technology and business (my business, our customer businesses and others).

The conversations have spanned topics like taking out systemic costs, gathering and assessing information for better decision making, testing revenue assumptions with very light CapEx and efficient marketing tools.

There have been several discussions about how cheap and easy it is to test certain kinds of product innovations. A great example is our Sherpa product line. We launched a new, multi-million dollar product line where all of our consumer facing technologies are built on open source tools and are hosted in the cloud. We made some minor modifications to WordPress and included modified but pre-existing plug-ins. While it is a mouthful of technology jargon, it means we went from idea to market in under 90 days, had almost no capital tied up in the creation of the service, rented the servers and bandwidth by the drip and were able to quickly test demand with very low risk. This represents a fundamental shift in product innovation cycles and costs. The cost and time compression in the innovation cycle has been amazing in the past couple of years. If used correctly, this change in capital requirements for innovation will enable established companies to compete with venture backed launches in a much more aggressive way.

At NCI, we pride ourselves on creating extremely efficient processes for high-touch services. In our Digital Sherpa world we are trying new technologies that can make a meaningful shift in cost per curated piece of content and learning systems that will help us improve the quality of content over time (in this case, quality of content can be measured in terms of how much audience, engagement or lead activity each content element generates). In a business predicated on efficient servicing of customers and measurable marketing benefits, the application of these technologies are critical. So, what is new about using technology to drive out cost? What we are seeing is again, very lightweight apps that cobble together other, pre-existing services to play like a Fortune 500 company with scraps of a budget. One great example is our use of Open Calais and Zemanta. Both of these are free plug-ins that make content curation faster by reading our posts and recommending tags, similar articles and images – all work we would need to do unassisted without the free tools. Our only real investment has been in training around these tools, while the payoff will be measured in reduced labor per piece. These solutions are not “industrial strength”, but they work well and provide real savings.

We have been playing with efficient communication tools for a long time. Products like Basecamp, Google Docs, and CubeTree have made project collaboration and information sharing significantly easier. The transparency of communications and information has reduced political friction and increased our speeds of decision making. Most of these tools are either free or nearly free.

One of the most amazing transitions I have seen of late is the reduction inn cost to get good, actionable data about the performance of a business. We have a small division that sells most of it’s product through email direct marketing. With a super cheap, open source CRM solution on top of a pay-per-drip email service, we can track the profitability of eery one of our marketing campaigns to the penny. When we want to test something new or different online, we use Google Analytics for free to gather tons of valuable data – if it seems to be working, we develop an industrial strength tracking protocol into Omniture. Our decision making around effective marketing vehicles has jumped by quanta by focusing on this end-to-end tracking capability. Cheap tools, valuable results. We had no need for a 100k+ investment in Siebel to play as sophisticated a game as the big guys.

Here is the last example for this post. I am on the board of directors for my building. When we are not listening to noise complaints, we are very focused on saving the building money. We just are now using free data to measure the efficiency of our boiler (we spend a lot on fuel oil). By focusing our attention on gallons consumed per “degree day” (a term I had not ever heard before), we are able to track efficiency of our overall system. With a couple of cheap remote thermometers, feeding info back to our system, we can stop overheating parts of our building to accommodate the “cold side”.

Technology has gotten cheaper (nearly free in some case), better (it seems to work most of the time) and more interoperable (we can aggregate data from everywhere to make good decisions). This should be powering mid-market companies to gain more operational efficiencies, test more innovations, communicate more effectively and make smarter, fact based decisions.

The iPhone/iPod Touch is a fascinating device for kids. It is so intuitive that it is a bit addictive. While I would never suggest that Sammy should replace reading, studying, sports, play, family or music time with iPhone time, I have watched Sammy become a good Scrabble player, better at speed math (through the “PopMath” app) and now learn a bit about risk taking and portfolio benefits through his playing Monopoly (mostly when stuck on a subway, waiting in a line or waiting for a movie etc.).

We started playing the “pass & play” version about a month ago. Sammy quickly developed strategies that were consistent with a basic understanding of ROI. In our first game he recognized that the last property (clockwise) in a Monopoly had the best ROI on a house or hotel. Those properties get higher rent for the same price of the house.

In later games he had started to understand the risk/reward benefits of leverage – he began actively mortgaging some properties in order to be able to opportunistically acquire the positions on the board that he wanted. Sometimes this worked out for him, sometimes he stretched too thin and a modest setback (landing on Income Tax) could lead to selling of houses or other bad outcomes. At least in the game of Monopoly, he seems to have become comfortable with taking some risk without being reckless (mortgage everything to acquire anything).

What was truly fascinating to watch was how he learned about diversification over the course of a bunch of games played. In one of our first games, he fought hard and “overpaid” in trades to acquire Boardwalk and Park Place – giving up several other properties that gave me monopolies elsewhere. He took all of his cash, some of it “borrowed” and built until he had a hotel on each property. I had the very unlikely luck to land on Boardwalk on 2 consecutive orbits of the board and lost (Monopoly Probabilities). Based on how he played games after that point it seems he thought he had found a dominant strategy for the game.

Since that game, he has not been so lucky (or I have been luckier?). He tried the same thing, overpaying for the Boardwalk monopoly but he consistently would run out of money before I would land on that super expensive property. I have watched him grow wiser with play. He is still a big fan of the Boardwalk monopoly and the green monopoly and will bet on the low probability, high reward outcome – but he definitely gets that spreading himself out, not giving up monopolies and placing more bets wins more games.

I think this is a great example of how technology can drive learning. Anyone who played monopoly could have internalized these learnings pretty quickly, but when you actually need to sit down at a board and play an uninterrupted game, you just don’t play that many games. It has been the ease of play and frequency of games that has taught Sammy these concepts.

Last week I spoke at the BIA/Kelsey Marketplaces Conference about NCI’s Digital Sherpa product. The conference covered local, vertical online markets and was well represented by online businesses large (Google, AOL), medium (Groupon, ServiceMagic, Oodle) and Small (Loopt, MojoPages). What was interesting and liberating for me was speaking with the only goal of eliciting response and conversation to learn.

At NCI, we are not raising money; none of our customers were in attendance; we are not really seeking buzz amongst our peers – we are working with our customers, experimenting to determine the best ways to market their products and services in the social media space.

Here was the premise of the presentation was that local media has always been about high touch service at an affordable price. We can look at NCI’s history with The Real Estate Book to see that in action. In the early days we were not just a media provider, but truly a full-service provider. Our interaction with our customer often began with taking photos of a house, included production of a 4 color advertisement and concluded with printing and targeted distribution of a magazine – an awesome value, priced today at ~$400 a page.

Now we are offering a local social media marketing tool that is designed in the same light. Our customers recognize that there is likely to be value in establishing an active presence in Facebook and Twitter and understand that having a current, active, blog-like web presence is better than an old (dusty) static web page.

Here is the presentation I used.

Here are some of the challenges people posed to me after the panel.

1 – You are just a content factory like Associated Content.

Not really. While we produce a ton of content (thousands and thousands of content elements per month), some are unique, born out of conversations with our customers, some are curated elements sourced from around the web, some are invitations to submit content from our audiences (who has the cutest dog) and some are guest elements from the area or our customer. While we certainly write a lot, our factory is more about aggregation, organization and presentation than it is about unique creation. Also, while we have a factory we treat each of our customers uniquely – kind of like a custom tailor. While everyone can get a shirt, no two shirts are exactly the same. (Think mass-customization of content.)

2 – You can’t really provide high touch service at that price point.

Yes, we can. We already do this throughout our organization. We retouch tens of thousands of photos every month. We create tens of thousand of ads every year. We customize our distribution patterns in over 400 markets and tune them every quarter. We execute marketing campaigns down to the customer level with tens of thousands of customers. We monitor our business advertiser-by-advertiser, making sure we understand our delivery on the value propsition for each of them. We are uniquely positiond TO provide high touch service at low cost.

3 – You can’t really curate 1,000+ blogs and keep them unique and relevant.

A lot about these blogs is local. While everyone wants to know the best pizza delivery sources in their commuity – each community has a different set of sources. Just curating the differing opinions about delivery pizza can be interesting to a resident deciding to try an new place or who is just moving in. Every one of our design customers has a unique perspective on their market – we just help them express it. Again, think of the custom tailor – lots of shirts, no 2 the same.

And these were the confirming statements that I heard.

1 – “At that price point, you are right in the local wheelhouse.”

2 – “I think your company was the only one on stage creating profit in social media.”

3 – (From a publisher) “The high touch service makes a ton of sense.”

The benefit of speaking with the intention of listening came from conversations that could extend what we are already doing into mobile, game mechanics and content curation tools.   I found that having a direct, honest, no-hype panel discussion created direct, honest, no-hype feedback, lots of learning and some potential immediate actions.

I have written a couple of times about the consequences of incentives. Metrics work the same way. As some people were quick to (correctly) point out, not all incentives are monetary and business metrics that are monitored, even without a bonus attached, become incentives in and of themselves. When I was a consultant a lifetime ago, we had a saying that “What gets measured, gets done”. We are working our way through one of those moments right now with my interactive team. The good news is that although we had a bit “metric myopia”, there were no bad consequences to speak of…

For our online businesses, our primary focus is being efficient lead generators for our advertisers. Since we can easily track email leads in Omniture (our web analytics tool), that metric had become the primary focus point for all of our dashboards (Email Leads, Traffic and Conversion). It has worked extrodinarily well for us – email leads in all of our brands are up. Personally, I check on our email lead production 5 or 6 times a day. In Apartment Finder, where we have made the most significant changes, email leads are up more than 300% since Septembrer. So, what is wrong with that?

The measure is incomplete. Take the example of Apartment Finder. Our advertisers ascribe significant value to 3 consumer actions; phone leads, email leads and “click thru’s” from our site to theirs. When we did our A/B testing on the new site design we monitored email leads and click-thru’s – but it was too complex to try to measure phone leads. We watched phone lead counts in aggregate, and they were not negatively impacted by any of the changes. I checked again tonight and we have shown lead lift in all 3 categories, which, in the case of phone leads is somewhat lucky in that we thought about it during design, but did not specifically test the results.

While it will be harder to do, it is imperative that we bring all of the valued consumer actions to the “dashboard” – because I would suspect that while we have done nothing to hurt phone leads, if it had been on the dashboard every day (or 6x a day for someone compulsive), we would have found many more ways to drive that result.

Metric Myopia. I know better, but I defined our metric too narrowly. A holistic view of leads (or better yet, holistic advertiser cost per lead), would have better perspective.

Here is a great example from the long ago past. At one of my consulting clients in 1996 I interviewed the credit department at a sales organization to understand the complete process flow of the sales division. I remember the head of the credit department saying, “we have not had to write off one penny of revenue in the past 12 months”. I had also just interviewed a regional sales manager who was angry because it took so long to get credit approval and for most new customers the terms came back “cash-in-advance”. Somehow, the sales conversation had not made it to the credit office. The credit department was not bonused based on bad debt at $0.00, it was just their driving metric. A risk averse company, they were clearly walking away from revenue and profit.

I am glad to say that Delta ultimately stepped up and has “made it right”.  Interesting point here is that the review of my complaint was prompted by my #Delta tweet and the follow-up, through Twitter by Direct Message of their customer service rep.   I truly believe that without the Social Media aspect of this issue, it might have gone unresolved and that I would have moved my business.

I don’t need to learn an additional route map. I don’t need to change up my normal weekly routine. I do hope that someone at Delta is trying to improve the flexibility given to their front-line customer service reps who deal with their best customers on a day-to-day basis. Detla and I would have both been better off if they had used their relationship with other carriers to get us home…

Dear Mr. Dubner:

RE: Case Number xxxxx

Thank you for providing the information requested. I apologize for my delayed response.

As a most valued Diamond Medallion member, we would not want this matter to continue to reflect poorly on our company. Therefore, I have requested that a check be mailed to you in the amount of $XXX.XX
Please allow up to 30 business days for the check to arrive from our bank.

Again, we deeply value your business and look forward to the pleasure of serving your air travel needs in the months and years ahead.

Sincerely,

Kathy Johnston
Coordinator
Customer Care
Delta Air Lines/KLM Royal Dutch Airlines

Original Message Follows:
————————-

Thank you. In advance of faxing, I have attached the American Express receipts for each of those transactions. You will see the total cost of the flights and the hotel nights was $XXX.XX.

—–Original Message—–
From: Delta Customer Care [mailto:custrel@delta.com]
Sent: Monday, March 01, 2010 12:15 PM
To: Todd Dubner
Subject: RE: Unsatisfactory Customer_Service (KMM2XXXXX3939L0KM)

Dear Mr. Dubner:
RE: Case Number XXXXXX
I am in receipt of your original complaint. Thank you for forwarding it to me. First and foremost, I want to extend my sincere apology for the unsatisfactory customer service you encountered from our Platinum desk, our Reservations supervisor, and our Customer Care telephone representative. Second, there was simply no excuse for lack of assistance when you and 5 family members were stranded away from home.
Your points are well made and your frustration is understandable.
Feedback like yours will help us to improve our overall customer experience. Be assured your email has been shared with our Reservations and Customer Care leadership teams for internal follow up.
I also recognize your decision to obtain a ride to Denver and purchase tickets on Frontier to Las Vegas seemed to be the best alternative for you at the time. Since you are a valued Platinum customer, I will be happy to review your expenses. Please fax to me at 612-XXX-XXXX copies of the airline tickets you purchased on Frontier for your family along with a copy of your hotel bill. On receipt, I will give this my close attention.
Thank you for sharing your experience. We value your loyalty to Delta Air Lines and we sure do not want to lose your business. I hope to hear from you soon.

Sincerely,
Kathy Johnston
Coordinator
Customer Care
Delta Air Lines/KLM Royal Dutch Airlines
Original Message Follows:
————————-
I am glad you reached out.

First the situation:
Last Saturday, 2/20, I was scheduled to fly with my family
from Eagle, CO – through Detroit – to LGA. My party included my
2 year old and my 10 year old. The flight was scheduled to depart at
12:00. At 5:30 am, I checked the website and found the flight was
delayed and I would miss my connection. I immediately called the Delta
Platinum Desk and worked through a couple of options. Either fly at
3:00 through MSP to LGA or fly through ATL at about the same time – with
a possible tight connection to LGA. From ATL, if we missed our
connection, we could fly the next morning. All OK. While I was on with
that representative, I asked what we could do if Eagle shut down. She
told me that there were no flights from DEN that night on DL, but there
were flights originating on other carriers (United and Continental) that
I could make and would get me home. Thinking I had some good options, I
went to the airport.
We arrived at the airport at 2:00 pm to find all flights cancelled. My
next call to DL was not so helpful. I called the Platinum desk again,
told them the situation, the number of people in my party and my ability
to fly from Denver through any hub to any NY airport so long as I could
get out that evening. I was told that the earliest flight my family
cold be placed on was on Sunday, 2/21 at 7:00pm routing through SLC and
ATL, arriving at LGA mid day on Monday 2/22 (with 2 little kids + 2
parent in-laws). I informed the agent that CO was scheduling a plane
the next morning from Eagle direct to Newark that was 1/2 full. I also
told her of my conversation earlier that morning about the UA flight
from DEN to ATL that evening that would enable me to stay the night in
ATL and get home first thing on the morning of 2/21. The woman refused
to help. She said the prior agent should not have mentioned another
carrier. She said the weather was outside of her control and the best
she could do was Monday morning. I asked to speak with a supervisor who
reiterated the same messages – sorry, its weather we will do nothing for
you. I asked a ton of questions of the supervisor about cities I knew I
could get to and found seats at 7:00 am the morning of 2/21 from LAS
to JFK.
To get home, I had an SUV drive us to DEN. I purchased tickets on
Frontier to LAS and paid for a hotel.
I filed my complaint while in the air on the Delta.com site. In that
complaint I made it clear that if no one from Delta reached out to me to
correct the situation, I would move my loyalty.
To take me from pissed-of to furious, yesterday I called the Delta
Corporate Customer Service line at 404 715 1450. I told them I was
surprised that no one had yet contacted me. I was told by the agent
that she could not look up my complaint and that “Delta is a big
company”. She said that she was not sure if anyone would get back to
me. The only active response I received from the company came from when
I tweeted about my experience and was contacted by DeltaBlog.

My issue:
I fly Delta a lot (FF# XXXXXXX). XXXk Million Miler Miles, 37k miles
this year, 104k last year. I have NEVER asked for an out of policy
switch to another airline. I could have selected any number of airlines
for those segments. Your Customer Service supervisor should have known
this. I showed my loyalty to Delta, and Delta said “No, we won’t pay
for your seats on another carrier to get you home tonight”. Worse yet,
they said “we recommend that you fly overnight tomorrow, on 3 flights to
get home with your 2 year old and 10 year old.”
In my life I have been a platinum flyer on Continental, American and
United. I have flown more than 200k miles in many years. This was the
worst airline experience of my life.

My recommendation:
If you have a good customer, treat them right. If I am a frequent
business traveler who buys first class, fully refundable flights 90% of
the time and I am flying with my family, make the exception and get me
home on another carrier.
I am not sure what you can possibly do to make this right. I am
interested to see what you suggest.
Meanwhile, I am scheduled to fly to ATL next week on DL. If not
remedied, I will move that flight and all subsequent to another carrier.
Thanks,
Todd Dubner
212 XXX XXXX

—–Original Message—–
From: Delta Customer Care [mailto:custrel@delta.com]
Sent: Friday, February 26, 2010 2:52 PM
To: Todd Dubner
Subject: Unsatisfactory Customer_Service (KMM2XXXXX3939L0KM)
Dear Mr. Dubner:
RE: Case Number 8XXX2
Thank you for contacting us about your flights from Eagle Vail. On
behalf of Delta Air Lines, I apologize for your inconvenience.
Unfortunately, I could not locate a copy of your original complaint. If
you can reply to this email with a copy of the details, I will respond
to you directly.
I look forward to hearing from you soon.
Sincerely,
Kathy Johnston
Coordinator
Customer Care
Delta Air Lines/KLM Royal Dutch Airlines