Appendix i

FoxMan – Executive Summary

Turning customers into fans, it is both an art and a science, and what some people call magic. How you do that magic is the key to success in every business. Customer loyalty is based on them getting value from the product, service, or content you are “selling”. Putting customers into perspective seems difficult but with a proper prioritization business profits grow. Customer retention is the priority both parties have committed before, information about previous transactions should make this repeat orders the least cost. Customer acquisition is the most costly, getting them to commit the first time usually involves a discount, and collecting all the required information from scratch, add up to the least profitable orders, because gaining a new customer is more costly than retaining a loyal customer. You don’t have to lure loyal customers in with a discount or spend time (read money) gathering the required order information from scratch. This simple focus of prioritizing on retaining customers can mean both more profit per transaction AND more transactions per customer. This is where we at The FoxMan Group can help.

To get anywhere you must start at the beginning:

Since the early 1980s we at FoxMan have developed software that improves business efficiency and effectiveness, first for accounting and later for scheduling people, places, and things. We excelled at building business information infrastructure, the tools to collect and report accounting and scheduling data. About the time the web appeared in the early 1990s, we started expanding the data collection and focused on data related to customers, vendors, and employees. We pioneered building a Customer Relationship Management (CRM) program, which interfaced accounting systems and allowed businesses to know more about who their customers were. The mid-1990s brought different ways to connect with customers - Internet email, inbound and outbound phone centers, kiosks, retail and direct to customer – and we built systems to track everything from order to delivery, collecting data by the gigabyte, all in separate databases.

In today’s economy with budgets tightening, we must find ways to provide the shortest path between the customer and a business’s product, service, and content, based on data we already have already captured using CRM. The use of technology must make “cents” and the data exists in the accounting system. We need to mine the data in a new way and turn it into information to increase both sales and customer experience. 80% of your business comes from 20% of your customers, so while tracking all customers is important, super-serving the core customers is the most profitable business in many ways.

Today’s core business – the shortest path to the customer based on known information.

The “art of CRM” is that it captures the who, the what, the where, and the when of each order or sale. What offer? For which product/service/content? To which selected group of customers? In what time frame? Via which distribution method? CRM answers all these questions that must be answered. The best way to do this is with the data from existing orders and sales data, to existing customers. A business can then make the best cross sales, up sales, or related sales then and secondarily find new customers based on similar best profile matching. For an example of this kind of collaborative filtering marketing is Amazon’s “if you bought this book, you will probably like these other books.” This is the most profitable of all types of transactions.

How can a company take these steps, how do we create the “science”

We go back to the basics of CRM, where the first rule is “know your customer.” We have created a template for storing customer information. All databases in the companies reach should be centralized to get a full “profile” of each customer, employee, vendor, and distributor. This step cannot be minimized; it is the core of successful CRM. Storing related details of all products/services/content from each customer order contained, tells you which employees who took the orders, from where (retail, internet, phone etc.) and what time of day. This tells us about this customer and allows us to reuse the information for the customer’s next transaction.

One factor contributing to customer loyalty is based on the ease of transacting; do not underestimate this fact. Reusing known customer information, like a shipping address or credit card number, is the simplest way to make order entry easy. This centralization of data into customer information is known as “silo busting.” The ability to exchange data interactively between these silos and the centralized customer and order templates are keys to keeping the customer information’s value.

Next we “profile” the products/services/content information. Historically we know who is buying what. When and where they purchased, and how they got it into their hands. We know which employees, vendors and distributors involved in the conclusion of the purchases.

Now the real “magic” begins - matching which offers to which customer profiles for what products/services/content/information profiles. This kind of “profile matching” (often called collaborative filtering) works well. The last step is how to communicate and when, what day and time of day. This last step of this targeted marketing approach is “getting the word out”. This is your path of communications, how do you inform each fan and when is also part of this “magic”.

So much data, so little time.

Over the years we experienced many things from which we learned, both successes (the good path) and failures (places we learned not to step) help us guide these processes and help us create not just industry standard practices but direct us to the profitable practices first.

By building the tools we learned why they were not used to the full extent revolved around three elements: time, people and money. By the time a large system project was put in place often the people involved gave “extra” time and effort in the creation and implementation of the new system. Their “real” jobs suffered and the “extra” time and effort had to be spent getting back to normal. At the same time there was not often new people assigned to the system/project who could assume the new responsibilities. Often these budgets were tight and stretched beyond the limits. These three ingredients mixed into a recipe for disaster. Imagine buying a new car, then not having the time or money to fill the gas and oil needs, while expecting someone else to drive you somewhere with no further effort. This leaves you walking. We want to help with the ride.

We want to help with success, we can help set expectations for success from the beginning, and account for all the needs to the care and feeding of a successful CRM oriented process. Our business is to outsource these business processes until they are taken “in house” upon implementation. Then the art, science and magic all start to happen. CRM is a change of style for a company. The magic takes time. It takes people. It takes money. Most importantly it creates profitability and customer/brand loyalty. Return On Investment (ROI) can only be calculated over time, usually years but time after time, in studies and real case examples companies utilizing CRM practices are more financially stronger and than all others. We have found reporting and data exchange (silobusters) are the keys to the magic: with the right offer, to the right people, at the right time, for the best products/services/content which yields a profitable and successful conclusion.

FoxMan’s heart and history are in the music business. This industry is a perfect case study for an artist to build a SiloBuster. Creating the shortest distance from the content creator, better known as an artist, directly to the consumer can change this industry. This short cut can allow artists to actually make a living without having to sell millions of records first. It also allows the artist to retain the ownership of their music, which in the current state of the industry is used as collateral by the record company, even after all their money is recouped and repaid. It could be compared to a mortgage, when the payments are all made, the bank still owns the house, and the artist still only gets between 10% to 15% of gross sales.

FoxMan is led by David Cooper, who has worked in the music business for over 30 years building software systems for every aspect of the music industry. Touring including artists, managers, agents, promoter and venues was our starting point before we ventured into ticketing, radio, record companies, studios, publishing, and insurance. We started before there were PC computers or DOS. Today most everything we do has migrated to the web were we have become:

Music Industry Experts to the web and technology markets and Technology Industry Experts to the music industry.

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