judith meskill's knowledge notes...

Larry Selden, professor emeritus of finance and economics at Columbia University, and Geoffrey Colvin, senior editor at large at Fortune magazine, argue in their book, Angel Customers & Demon Customers, that any company that claims it's customer-centric is "an outright fraud" unless it can pass a three-part test:

* Is there a specific person who "owns" the customer and can develop specific value propositions?
* Who is accountable for the profitability of a customer or segment?
* And how significantly does the company differentiate interactions with customers?

The subtitle of the book is Discover Which is Which and Turbo-Charge Your Stock, which summarizes the book's premise well. The only way to achieve a P/E superior to the market - not your industry - is to understand that a company is no more than a portfolio of customers.

Companies that want a superior stock price must understand the relative profitability of customers, develop different value propositions for customers of varying profitability and organize around customers.

Here's what the authors say:

You can build gross margin by making capital investments that reduce labor costs; it works because the capital costs aren't included in gross margin. You can buy market share with price cuts. You can increase customer satisfaction and retention through all sorts of giveaways to the customer that will cost the company dearly.

Only by looking at customer economic profit and a contribution to a premium P/E can one make a sound judgment about the success of an initiative...

Selden and Colvin offer a new way to calculate customer equity - although, curiously, the term is never used. A "Customer Segment Value Creation Scorecard" divides each demographic or other segment into current, new and lost customers.

Sales to each group are broken out by products, services or intellectual capital, and reflect cross-sells and up-sells. Costs include COGS (costs of goods sold), account management, acquisition costs and, interestingly, Customer Knowledge Management (CKM), which represents the costs of acquiring, maintaining and using customer information. Subtracting these costs (and taxes) from revenues gives the familiar figure of net operating profit after tax, reached in a new way.

Of thirty thousand British information workers surveyed, 70 percent of respondents claim up to one third or more of their calls do not get through to the right people the first time. They are either forced to hang up or to leave a message when an associate is not available to take the call. In fact, more than one quarter of respondents believe that 50 percent or more of their calls fail the first time because people are not available on the other end of the call.

ased on the survey and its own research, Siemens estimates each office worker wastes at least 30 minutes a day playing phone tag or making unsuccessful phone calls. After considering average employee hourly pay rates, based on figures from Britain's National Statistics Office, unsuccessful phone connections costs British businesses nearly L83 million ($139.1 million) a day, or L22 billion ($36.87 billion) in a working year. These figures do not include toll costs.

Connecting employees to associates quickly is a familiar concept inside call centers, especially when agents need to call an associate or a supervisor for help with a customer. A related study this summer by Collaborative Strategies, commissioned by ePeople, revealed that more than one-third of the workweek is spent answering intrusive questions, which often necessitates another call to a colleague for help.

Collaborative Strategies surveyed 157 respondents from companies with at least $50 million in revenue.

"Where we see this most often is in what we call exception management, which is when you have an irate customer.... Eighty percent of the time you can use a low-cost automated solution [to answer customer queries]," says David Coleman, managing director at Collaborative Strategies.

The new version of the eGain Data Adapter allows customers to easily access data from any business system including legacy eService systems, ensuring a seamless switch to eGain with no business disruption. Furthermore, the solution enables fast and easy access to complete customer views and associated service history, based on data from eGain and non-eGain systems.

"Staying with obsolete e-Service systems could be a fatal mistake in today's tough business environment," said Ashu Roy, CEO of eGain. "The eGain SafeSwitch Program and the eGain Data Adapter, along with the guarantee of investment protection and no business downtime, make it a no-brainer for companies with such systems to make the switch to eGain."

Responding to a growing need for more effective ways to support product knowledge management within organizations, NGRAIN(TM) Corporation, a leading interactive 3D visualization and simulation software developer, today announced significant advances in its innovative products, Knowledge Module 2.1 and Mobilizer 2.1.

NGRAIN revolutionizes the way organizations maintain and communicate complex product and equipment knowledge. This allows employees to easily embed knowledge within 3D models, resulting in Knowledge Objects that are deployable to users with desktops, laptops or Tablet PCs. NGRAIN Knowledge Objects provide a powerful visual index to reference materials and knowledge, through an on-demand virtual product experience available to anyone, anywhere.

The three-day meeting being is being held at the headquarters of the Pan American Health Organization (PAHO).

The 15-member Advisory Committee on Health Research (ACHR) - which includes eminent scientists from several hemispheric nations - will review the initiatives and strategies of technical cooperation by PAHO agencies for the promotion and development of health research.

The task this year has mainly to do with the management of information and knowledge.

The meeting was officially opened by PAHO Director Dr. Mirta Roses, who said that faced with "inequity, urban growth and poverty the likes of which this continent had never witnessed before - poverty has tripled since the 1970s - we see knowledge not as something static, but as a tool to change the situation."

Roses said that development and access to knowledge are essential to meet the new challenges and to sustain the progress made in the area of health. "In this regard," she said, "the trail-blazing work of ACHR helps show the way by pointing out the best ways to reach those objectives."

Dr. Richard Van West Charles, PAHO's area manager for Information and Knowledge Management, noted that one of the elements for gaining knowledge is research.

"Research is often perceived as a tool of exploitation by the powerful, or as just a way to publish it in a scientific magazine. However, it is a vital component of development and, as such, must be accessible to all levels of society." For this to be possible, he said, every PAHO initiative must have a communications component that aims to reach wide and diverse audience.

Dr. Ronald Davis, Professor of Biochemistry and Genetics at Stanford University and Director of the Stanford Genome Technology Center, first used the application during its beta release. Dr. Davis, who is pleased with the application's novel analysis of gene expression data said, "Ingenuity Pathways Analysis is the first successful application to bring a systems biology approach to large datasets, enabling functional analysis on a genome scale. Its delivery, incredible ease-of-use, and most importantly, its biological insights, make this a necessary solution for anyone doing gene or protein based research."