David Sable Weighs in on The New Normal

As the world continues to adapt to the current global crisis, one question still looms: what will life look like once this is over? Our advisory board member David Sable weighs in on “the danger of returning to normal,” and presents us with important questions that must be asked regarding our transition to the “new normal”. It will certainly take leadership, innovation, and collaboration to learn from this unprecedented situation and to create a world that is adaptable to any challenge or opportunity that presents itself.

The article below was originally published here

The Danger of Returning to Normal

Published on April 3, 2020 by David Sable

Let’s be clear…we will not be returning to “normal” when this crisis is over. In fact, every day has become a new normal, as the rules constantly change and as goals seem to move further away.

No, we will not be returning to normal…we will be, we are, evolving to a new standard. The winners, when the crisis is over, will be those who adapt, those who innovate and transform not to some new normal that becomes yet another stultified platform of best practices and conventional wisdom, but to something that is dynamic and constantly evolving, an enlightened platform for the novel world we will find ourselves in. As I have written before, quoting Dwight D. Eisenhower, “plans are useless, but planning is everything.”

Have we ever had so much proof of this? Imagine if we had been planning for a pandemic, as some had urged. Instead of a Coronavirus debacle where some bemoan the fact we had no plan (my view would be that plans would have been useless as the full impact could not have been known), but had we been planning for one…had we ordered enough masks, gowns, ventilators, and test kits, the plans we would be implementing would look way different than the despair, confusion, and sheer FUBAR that we see today.

So, ask yourself: where are you going to come out of this personally and in your professional lives? Are you falling for the rhetoric on one side or ignoring the opportunities on the other? Are you paying attention to “People First”—the way people are actually using technology? Are you recognizing the need to connect…the enablement of technology to do human things and have human interaction…that immersive experiences are as simple as sharing a glass of wine?

Are you paying attention to what virtual platforms and tools actually work? Are you noting how easy it is to have a conversation and be productive without physically transporting busloads of people? Are you paying attention to the instances when our remote tools fall short of your needs…when you require face-to-face interaction and people in the same room at the same table?

Do you have a new appreciation for those who power the “gig economy,” the people we have profited from to drive so-called “Disruption,” so that we wouldn’t feel guilty? People who are now without a safety net and have few choices? And yet, many people not of the gig economy are finding themselves in similar places right now as a result of this new disease.

Personal time with family and friends has never meant more—certainly not in my lifetime. How will that impact your work policy and schedule going forward?

How about what’s really important? What looked like a crisis yesterday kind of pales in comparison to the madness of today, no? Do the circumstances of today give us a new perspective on must have, good to have, nice to have and who really cares?

Looking back, we will be asking ourselves, “who behaved in what manner?” Who took advantage of hard times to be a better person and who did the opposite…who was helpful and who was harmful…who was pleasant and who was nasty? There will be a reckoning—not for reward and punishment, although that will happen—but for our future behavior environment, for company and personal culture.

We will have to rethink the very physical structure of our offices. WeWork thinking drove many of us to sit one on top of the other. Four feet of personal space seemed a luxury. Already, planners are suggesting at least six feet is necessary. How will that affect our seating plans at work? What about restaurants? Are you going to want to sit at a communal table? Will you be happy being seated mere inches from the next table, squished against the people sitting at your own? Are you okay trying on clothing in a store without knowing who else has tried it on first? This is just the beginning…

What about leaders? Are you starting to better understand the difference between leaders and rulers? Between leadership and power? Between leading by example or controlling by “what’s good for me?”

Last, and maybe the bottom line…trust. Trust has taken a huge hit. Politicians are blaming each other, pundits pontificate without facts, and the game changes minute by minute. Personally, my trust structure has crumbled…I don’t see you, I don’t know what you are doing or saying, and I have no real clue where I stand. Trust, internal and external, between people and institutions, between teams…between all of us…we need a reset.

This is just the start of the discussion you should be having with yourself, with your family, with your friends, and with your company. My greatest fear is that we return to “normal,” and glibly call it the “new normal.” My view is that those who do, will fall by the wayside. Listen:

“When written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger, and the other represents opportunity”— John F. Kennedy

And therein lies a warning and a lesson for us all. We are in grave danger if we simply revert to old ways after we make it through all of this, but if we evolve to face this new world with brave and enlightened thinking, the opportunities are endless.

We need to restart—and jumpstart—trust as a new beginning.

What do you think?

Here’s How Telemedicine Can Help Provide High-Quality Care During COVID-19

As originally published by Patrick Carroll on Linkedin.

COVID-19 has placed a huge strain on our healthcare system and healthcare workers are taking significant personal risks to provide in-person care. For those working tirelessly on the front lines of treating acute cases this is unavoidable, and I speak for millions in saying thank you for this heroic effort. Meanwhile, telemedicine is offering a way of opening up access to high-quality primary care to millions of Americans who are staying home to contain the spread of the virus.

Use of telemedicine by doctors was rising well before COVID-19. There was huge consumer demand, coupled with an anticipated shortfall of 46,900 to 121,900 primary and specialty-care physicians by 2032 (according to the American Medical Colleges). Many doctors use telemedicine to complement their existing in-person practices and provide patients with access to high-quality care at transparent prices. In a recent survey of providers on Hims & Hers, nearly 80% said they use telemedicine as a flexible way to provide additional care alongside in-person consultations.

Since our launch, we’ve been focused on providing access to treatment for a number of chronic health conditions. But a few weeks ago it became apparent that there was an urgent need for more access points to care. We decided to rapidly adapt, adding the ability for providers to treat a number of primary care conditions from the safety of their homes. This was always in the long-term plan — there was a clear demand from Hims & Hers customers to have the option for at-home primary care — but the services weren’t on any near-term product roadmap.

I knew our existing systems could be thoroughly but rapidly updated to support primary care. My time at Walgreens overseeing more than 400 retail clinics meant I was familiar with the effective use of evidence-based guidelines to assess a wide variety of conditions. I also knew that the provider group serving patients through our platform was fully capable of making this shift. The healthcare professionals on our platform are highly qualified and many are family medicine and general practitioner providers who specialize in providing primary care. These new primary care platform offerings were reviewed in depth by the medical group leaders, our expert medical advisor team and the clinical quality team.

Providers on our platform are now able to treat around 70% of the conditions that patients seek treatment for in retail clinics. The range of conditions is broad, including flu, sinus infections, conjunctivitis and UTIs. This service is now available in 28 states and our hope is to bring it to even more people soon.

Since launching access to primary care, we’ve heard from providers who work with us that patients feel a deep sense of responsibility to alleviate pressure on their local healthcare system by seeking virtual care, as well as a desire to stay at home and away from those who have already contracted COVID-19. And providers themselves, faced with a lighter than normal caseload because of postponed elective visits and procedures, are relishing the opportunity to continue seeing and helping patients.

Every healthcare provider who is providing primary care on telemedicine platforms is making an important contribution in the fight against COVID-19 and doing their part to help their colleagues on the front lines stop the spread.

How AI is Impacting the World Right Now, Featuring Allan Andersen from IPsoft

Every job has at least one mind-numbing task that employees dread doing, but it’s imperative that it gets done. Whether it’s something as simple as data entry, or complex as analyzing hundreds of datasets from several platforms and drawing comprehensive insights. In all industries at every seniority level, there’s brunt work.

Take healthcare for example. Countless healthcare networks are finally moving from paper to digital, but this process requires admin staff to spend hours upon days copying and pasting text from different databases and documents, spurring a 42% employee turnover in some cases.

Tech leaders have hyped up Automation and AI to be the inevitable solution to the dilemma, but with hundreds of AI services in-market and very few companies adopting them, many industry leaders feel led astray by high expectations.

Let it be known: patience is a virtue, and I think we’re just on the cusp of a major shift. In our own network of thousands of C-Suite executives in cybersecurity, healthcare & marketing roles, AI implementation is a leading department objective for 2020 projects. It’s been estimated that AI generated $1.3B in revenue in 2019, and in the year prior, the AI market grew by over 63%.

Sure, AI isn’t at the point of being broadly adopted by companies, but there are countless skills and technologies that are currently in-market that may surprise you.

COVID-19 has prompted immediate advancements in the way patients are treated — Tampa General Hospital has recently unveiled AI tools that immediately detect patient symptoms through a face scan, and it can even make predictions on the likelihood of more severe symptoms appearing, like respiratory failure. Advanced technology is also being implemented on R&D for the cure, with AI currently drawing insights from data mining 29,000+ academic articles on the virus.

The 24-hour news cycle has spurred the need for constant content from news outlets, and AI plays a driving force in making that become possible. Some of the compelling media outlets are already using AI to write content, like The New York Times, Associated Press, Reuters and Washington Post. In fact, Associated Press contributes 30,000 articles a month to AI functionality.

The software process known as “Natural Language Generation (NGL)” has the ability to uniquely structure a written narrative in several different formats, like social media statuses, reports, essays, or even poems. You might be thinking that content written by a robot would read as “bot speech” lacking complex sentence structure, but just look at what’s possible when you give an AI a one-sentence prompt.

We’re living in an unprecedented period in human history. Wifi was invented just over 20 years ago, and look at the leaps and bounds we’ve made since then — today, robots can actually READ our brainwaves and translate them into speech. How might AI technology evolve in our lifetimes alone?

For the time being, in most companies and industries, AI will be tasked with the mundane “brunt work”, it maximizes efficiency, and allows for workers to focus on big picture projects. But ultimately, this shift will change the nature of our work, evolving the workplace as we know it. Forbes made the case that humans may become “more human and empathetic to drive customer intimacy” and “collectively make society and our environment better” because of it, and perhaps there is some truth to that.

I sat down with Allan Andersen from the leading AI technology company IPsoft to discuss one of their latest projects, Amelia. She’s part of the world’s first marketplace for digital employees, which offers companies the ability to scale, lower costs, provide greater efficiency and enhanced productivity.

EF:

IPsoft is the pioneer of digital employees, can you tell us about how this project began and what went into building your digital marketplace for employees?

AA:

Correct, Amelia was the world’s first virtual agent when launched in 2014. In 2018 we launched a first embryo of a marketplace, based on Amelia´s extensive experience and established track record of delivering ROI at many Fortune 500 companies. This was the first off-the-shelf marketplace for AI solutions specifically designed for the banking, telecom, hospitality, insurance and healthcare industries, to provide state-of-the-art AI solutions for any business or government organization. Back in 2018, our marketplace primarily had reusable components that would serve as a kick-start to many projects, but work still had to be done by the adopting customer. This has now evolved into digitalworkforce.ai, a fully-fledged store of digital employees with roles and skills to augment human employees, and most importantly this can be activated with minimal effort of behalf of the adopting customer.

EF:

Much of the talk surrounding the current state of AI relates to mundane tasks, like data entry or chatbot utilities- what is the most unique skill in Amelia’s arsenal?

AA:

We continue to innovate at a rapid pace. In my opinion, the most unique skill these days is introduced in Amelia V4 – a completely new level of integrated end-to-end learning. Previously, building new end-to-end skills had several manual steps including back-end integrations into applications. IPsoft defines these end-to-end processes as those that start with an individual requesting assistance and continuing through either speech or text to a front- or back-office employee. Then the employee has a dialog with the individual customer and accesses one of more applications to resolve the request. Amelia can observe that entire process and synchronizes all the parts into a coherent flow, i.e. intent, entities, dialog, process, and most importantly system tasks and actions (i.e. how the human user performs actions in enterprise systems), to build an automation which can perform this task without any human involvement.

EF:

Amelia is currently being utilized as an IT operations expert, HR representative, and customer service agent amongst several other roles- are there any plans to expand on her capabilities? What roles do you see as a good opportunity for Amelia in the future?

AA:

The future is going to be collaborative. Our digital colleagues can assume entire roles, such as insurance adviser or IT operations specialist, but we do not purport that these solutions should entirely replace your human insurance advisers and IT operations specialists. Instead, our solutions eliminate the unnecessary complexity between humans and enterprise systems. Whether they’re human workers or customers, our digital colleagues empower all users — regardless of technical proficiency – to easily access information and services.

EF:

The AI space is seeing exponential growth, but many of the tools available today have left leaders disillusioned or led astray by high expectations. What separates run-of-the-mill automation from game-changing AI solutions?

AA:

It really is very simple but easy to mess up. Successful AI implementations are like a great experience at a 3-star Michelin restaurant – it requires several aspects to come together fairly flawlessly. However, once you have mastered the dishes it can be more rinse-and-repeat.

The first aspect is not surprisingly superior ingredients, i.e. the technology platform. Amelia is obviously leading the field from a conversational AI perspective, but it also includes built-in API integrations to backend systems, intelligent escalation systems with human and AI collaboration, etc. so it is a complete end-to-end platform.

The second aspect is a well-functioning team of cooks, waiters, and maître d’, i.e. our implementation teams, cognitive engineers, conversational and UX designers. IPsoft has been implementing Amelia successfully for many enterprise customers over the past 6 years, we have the staff, tools, and processes to do the rinse-and-repeat.

Finally, the head-chef designing the dishes/menu, i.e. the world of conversational AI, that is the use-cases we will implement. Our team has the experience to select and deselect what works and does not work, sometimes that means saying no to a customer for a particular use-case and sometimes that means being innovative and trying something that has never been done before.

EF:

How do you think the growing implementation of AI in the workforce will affect employees? And how might AI positively impact our world?

AA:

Much has been written about automation and AI within the enterprise as job killers. However, digital employees, in particular, can open up opportunities for new services, products and go-to-market models that will lead to higher-value and higher-paying jobs. Naturally, some tasks will be automated, especially those that are repetitive and lower value. This has happened throughout history and almost nobody wants to step back into doing these things once they have been automated.

Also, enterprises are implementing automation and cognitive AI that handle extreme high-volume tasks at scale, as well as process consumer transactions — everything from credit card disputes and payment processes to account issues. In tomorrow’s world, there won’t be enough humans to deal with that scale. The COVID-19 pandemic has shown increases in customer service demand for some enterprises far outpaces their ability to deliver.

EF:

Do you think we’re set to see major changes in AI within the next five years? If so, what do you expect to see?

AA:

Yes, and 5 years is a very long time in AI. I think the biggest thing is going to be “Combinatorial Innovation” where ability such as Conversational AI will be combined with other technologies – old and new – to create new disruptive products and services. We moved from a web-drive world to a mobile-drive which started around 2010, 2020 will be the era of a semantic-drive world or as we call it the “invisible UI” where people transact with a system purely through voice.

Allan made an excellent point on the issue of bandwidth. Amidst the COVID-19 pandemic, providing aid for the unemployed has become a massive and unsolvable issue. Employment offices are closed for in-person assistance, phone lines are jammed and websites are constantly crashing, ultimately leaving people with nowhere left to turn. That means that the number of people in need of unemployment benefits is well beyond the 6.6 million that had the opportunity to file in the last week alone. In crises like this, there’s simply no way to address the unprecedented volume with systems we currently have in place. An AI solution would prove to be a game-changer in this process, and perhaps save the economy from further calamity.

AI has long held the stigma of potentially being the greatest existential threat in our history, and undoubtedly, these technologies must be properly regulated- this cannot become the wild west (or should I say… Westworld.)

On the flip side of the token, these innovations can enable us in times of crisis, and on the regular day-in and day-out, employees can work to their full potential if employers can automate tasks that are simple yet time-consuming. Can you imagine work prior to the creation of Excel? Keep in mind that is a recent innovation, it debuted just 35 years ago. The world as we know it today is a far cry from 50 years ago — global technology has innovated every industry, and there’s no possibility that it’s slowing down. The workforce will need to acclimate, just as it always has. Humans have the remarkable ability to adapt, and in the years to come, AI has the potential to open market opportunities that are inconceivable to us today, much like the shift to the web in the ’00s and the shift to mobile in the ‘10’s.

ShieldX’s CISO Guide to Ransomware Prevention in the Data Center

Among the most dire consequences of a successful cyber exploit are ransomware attacks. Costs for dealing with ransomware average out to tens of thousands of dollars, with the price tag presently doubling every quarter. State and local governments—often with underfunded network infrastructures—find themselves less prepared to resist ransom demands and are paying an average of $338,700, according to ransomware consultancy Coveware.

These public sector attacks offer a window into the methods and risks of ransomware attacks, as these are often more openly covered in the media. There are, unfortunately, plenty of them to look at, with 53 attacks targeting state and local governments in 2018, according to a report from threat-intelligence firm Recorded Future. 2019 is tracking to be well above that figure.

Click here for the full guide

InterSystems Proven Scalability for Health and Care

For large healthcare delivery systems, software scalability is critical. As organizations grow, they need data to flow seamlessly across their health IT systems to provide a unified care record, and for analytics that span the care continuum. However, many first-generation data-sharing initiatives fail to address fundamental technical challenges, including access, scalability, and performance.

Customers often come to us when searching for the right solution for their second-generation interoperability investment. In InterSystems HealthShare®, they find a proven and powerful foundation, with integration, information sharing, and analytics solutions that scale easily to handle their own success and thousands of concurrent users. Consider, for example:

Replatforming at Scale: Greater Houston Healthconnect

Houston has grown to become the third-largest city in the United States, renowned for its healthcare institutions — Memorial Hermann, MD Anderson Cancer Center, and Houston Methodist, to name a few. These institutions share their medical records through the Greater Houston Healthconnect.

Click here for the full report

How to Stay Motivated While Self-Isolating and Social Distancing

This article was contributed by Thelis Negron, Founder of MBX – The Mind and Body Experience.

How can you help yourself stay motivated while self-isolating? Here are a few helpful tips to keep you focused on staying healthy and positive:

We have entered unchartered territory. For most of us, staying completely confined to our homes without the ability to have physical contact with friends, let alone our own family members can be very distressful. Add to that the extra task of trying to maintain a normal life during this period where nothing is “normal” and everything we do has to be monitored to a certain degree. Life as we know it, at least for the foreseeable future, is completely derailed and if we don’t make a conscious effort to maintain some sort of control over it, it can be very easy to fall into unhealthy habits. How can you help yourself stay motivated while self-isolating? Here are a few helpful tips to keep you focused on staying healthy and positive:

Set a routine

Now that we are self-isolating and are all working from home and/or staying in 24-7, it’s important that we create an environment that feels productive in order to avoid feeling negative and down. The best way to do this is by setting a routine. This is especially important for those with children who are used to having the daily school schedule and who really aren’t able to create a routine for themselves. However, as adults, creating a routine is equally helpful for us to avoid becoming depressed from the lack of structure in our own daily schedules. Nothing can be more daunting than waking up every day and having to figure out what to do with your time. Under normal circumstances after a long work week having nothing planned on a Saturday or Sunday morning can feel liberating. But on a daily basis, this can become a source of anxiety. I suggest creating a schedule around the staple daily activities: wake up time, meals, bedtime, etc. Maintaining the same schedule daily will not only limit the possibility of downtime, which can lead to emotional lows, it may also help the day go by quicker so you won’t have too much time to focus on the fact that you’re stuck at home.

Make an appointment for your self-care

Self-care can be very healing during this time of self-isolation, because the more you do for yourself the better you may feel! And self-care can look any way you need. It could be making time for your favorite show, time for a call with your good friend, or my personal favorite, time to work out! Working out during this period has helped me tremendously. It is a known fact that exercise releases the feel-good hormones in your brain called endorphins. Endorphins are chemicals produced by the body to relieve stress and one way to tap into them is through exercise. The best part is when it comes to releasing endorphins, it doesn’t have to be anything too intense—even moderate exercise can help the release of these natural body relaxants. Moreover, the most important key in this suggestion is to actually make time for your self-care, whatever it may be. Nestled in your daily schedule, make sure you make an appointment with yourself for your self-care so that the day doesn’t pass you by without it!

Make virtual appointments with “feel good friends”

A lot of people are stressing out about the current situation as we are surrounded by bad news all day every day. Although it’s important to stay informed, it is equally important to try and occupy your mind with thoughts that don’t involve the crisis. This is a good time to reach out to your “feel good friends.” We all know that someone in our lives—could be any loved one, friend or family member—that is just super positive. These are the people you should try to spend some virtual time with right now. Make note of pessimistic people in your life who truly find it difficult to distract themselves from the worry of what is happening around them and inadvertently bring you down with their personal anxiety. We all know the “life is terrible and there is nothing else to say,” people who no matter how much you try to make light of the situation, they just can’t seem to. This is the time to try to lessen your exposure to any negativity. I’m not suggesting you cut-off your “Negative Nancy” friends completely, but do try to reach out to the ones who are able to talk about something more positive these days. Yes, things aren’t great and right now there doesn’t seem to be a light at the end of the tunnel quite yet. However, life is continuing and we have to try to stay in good spirits as best we can so that we don’t compromise our immunes systems at such a critical time when we need them to be strong! While self-isolating, make an appointment to talk to your feel-good friends. If you are that person, try to lift the spirits of those in your life who have a hard time doing it for themselves. However, make sure you also take care of your own emotional health in the process!

This is a crazy and scary time, to say the least. For that reason, it is so important to make a conscious effort to stay healthy and positive. Try to incorporate good thoughts, good food, and good energy into your life daily and before you know it, life will be back to normal!

Want more health and fitness advice? Click here

Exponea’s Scott McNabb Talks CDP on #MillenniumLive

Scott McNabb, SVP and General Manager of the Americas at Exponea, sat down with us for an episode of #MillenniumLive at the Digital Marketing and Digital Retail Transformation Assembly earlier this month. Scott discusses the challenges marketers face with changing consumer behavior and disjointed technology stacks, and how Exponea uses AI to make sense of data and engage the audience from a multichannel perspective.

Watch the video interview here

Listen to the podcast episode here

About Scott McNabb

Scott is a prolific leader and marketing technology evangelist who is passionate about guiding companies towards extraordinary revenue performance. With over 20 years designing and executing revenue generation models for Marketing and Sales leaders worldwide, Scott and his teams have guided countless Fortune-500 companies toward well-documented success. Scott’s rabid focus is driving business value extraction thru increasing customer intimacy thus increasing revenues.

Marketing Innovation Starts Here

Digital Transformation involves ongoing exploration by today’s leaders, and our best advice is to not trek the journey alone. Our Digital Marketing Transformation Assembly coming this August in Denver is set to be an inspiring event featuring some of retail’s top C-Suite executives.

We know what you’re thinking…

This isn’t Your Run-of-the-Mill Conference or Summit.

Our Founders, like many C-Suite executives today, became disillusioned by the slew of retail conferences, summits and events on the market today that promised “world class networking” opportunities with leading industry decision-makers. In reality, they found that these events had antiquated discussion topics presented in an impersonal format, and quite frankly, it seemed like just about anyone could attend the event.

What Makes a Millennium Assembly Different?

We’re dedicated to creating the greatest think tank of today’s executives from some of the most prominent companies today. Our invite-only events consist of 55 carefully selected leaders holding C-Suite, EVP, and SVP positions from Fortune 500 companies.

These attendees are provided the opportunity to intimately connect in workshops & roundtables with fewer than 25 people, with interactive networking opportunities at our cocktail hour and Gala Keynote Dinner and personalized 1:1 meetings. This is an experience like no other, all taking place at some of the most beautiful hotel and resort venues in the country.

We’re serious about executive education. Our Assembly Agendas are data-driven and curated from our industry-expert Advisory Board, a group of 26 industry movers and shakers with a proven record of digitally transforming organizations from the ground-up. The prevailing topics and trends discussed at this assembly will cover the most poignant challenges affecting leaders today.

The Millennium Alliance’s goal is to change the way leaders look at executive education, and you won’t find this level of content, discussion, and networking anywhere else. We’re on the journey to digitally transform the retail industry with you.

Join the Assembly

Want to find out if you qualify? Millennium Membership >>

Are you a Solution Provider interested in Sponsorship Opportunities? Learn More >>

CISO’s Guide to ShieldX and Zero Trust Networking

With the onset of cloud computing, perimeters dissolved due to fragmented data centers. Suddenly, data and applications went from nicely confined rooms with a handful of doors and windows to virtualized environments with no perimeters. It was back to the Wild West, which meant security and compliance were quickly downgraded—and the increased interest in Zero Trust for network security. In fact, NIST has released Draft Special Publication (SP) 800-207, Zero Trust Architecture. Forrester’s report, Zero Trust For Compliance (July 15, 2019), details control mapping for Zero Trust against 12 industry and government compliance mandates.

Historically, security was attempted primarily by fortifying the data center perimeter. That architecture is no longer effective, as there is an incongruity between the physical data center boundary and virtual perimeters. Those new perimeters can take up any size and shape and change at cloud speeds, making it impossible for traditional security to follow. Additionally, the security controls offered by cloud vendors are weaker than traditional options and are often no match against attacks hindering confidence and compliance in cloud adoption. A comprehensive Zero Trust networking architecture is required.

What is Zero Trust Networking?

Creating a Zero Trust networking architecture means creating a least privileged environment. This requires an understanding of:

•N-tier application structure

•Tier boundaries

•Tier isolation

•Microsegmentation

•User, process and workload identity

Click here for the full guide

#MillenniumLive Talks DTC, Customer Loyalty & Attribution with Mark Friedman

Mark Friedman’s vanguard insights hail from his experience with a number of top retail companies, like Steve Madden and Brooks Brothers. He is now the President of Details Interactive and recently launched his own podcast, The Marketing Playbook Podcast.

In this week’s episode, Mark shares his wisdom on a number of topics, including the shakeout DTC brands are facing, the best ways to approach customer loyalty through experience-based initiatives and one of the greatest challenges for today’s marketers: attribution.

Watch the video interview here

Listen to the podcast episode here

More About Mark Friedman

Mark has spent more than 25+ years in the direct to consumer business. He spent his early years focused on finance and ultimately moved into catalog marketing with a start-up business. He has led the marketing initiatives for a number of catalog and later, e-commerce focused brands including Brooks Brothers, Full Beauty Brands (formerly Brylane/Redcats), Amerimark and Steve Madden. At Madden, Mark was President of E-commerce. He is highly analytical yet creative, and he has driven growth through customer acquisition and retention programs and has been the architect of a number of loyalty and private label credit card programs. As an e-commerce leader; Mark speaks often at industry events. Mark is a strong leader and he has spent many years mentoring early stage companies. Most recently as a Mentor through XRC Labs, he has worked with 3 companies helping to shape their go to market strategies.

Retail Innovation Starts Here

Digital Transformation involves ongoing exploration by today’s leaders, and our best advice is to not trek the journey alone. Our Transformational Retail Assembly coming this August in Denver is set to be an inspiring event featuring some of retail’s top C-Suite executives.

We know what you’re thinking…

This isn’t Your Run-of-the-Mill Conference or Summit.

What Makes a Millennium Assembly Different?

Join the Assembly

Want to find out if you qualify? Millennium Membership >>

Are you a Solution Provider interested in Sponsorship Opportunities? Learn More >>

How to Value a Company by Analyzing Its Customers

As originally published by our Marketing Thought Leader, Daniel McCarthy & Peter Fader on HBR.com.

In the weeks leading up to the initial public offering of apparel retailer Revolve Group, in June 2019, investors struggled to come up with a fair valuation. Several recent IPOs—most notably those of the ride-hailing firms Uber and Lyft—had been disappointing. Revolve had delayed its IPO for months because of a downturn in the stock market. Despite the headwinds, its IPO was priced at $1.2 billion—and it exploded by an additional 89% on its first day of trading, making it one of the best first-day IPO performances of 2019. The spike brought the company’s valuation to roughly 4.5 times its revenue over the previous 12 months—five times the multiple of its apparel-retailing peers and more akin to that of a technology company. What happened, and why did investors originally fail to see just how strong a firm Revolve was?

Revolve’s premium valuation was not a fluke. It stemmed from the firm’s strong underlying fundamentals, which were not fully appreciated by the underwriters who set the IPO price. This strength was less about top-line revenue growth and more about strong customer-unit economics: Simply put, Revolve not only acquired its customers profitably but retained them for many years, and that meant its longer-term profit potential was larger than its revenue growth to date had implied.

Revolve’s IPO success illustrates the movement toward customer-driven investment methodologies. Using customer metrics to assess a firm’s underlying value, a process our research has popularized, is called customer-based corporate valuation (CBCV). This approach is driving a meaningful shift away from the common but dangerous mindset of “growth at all costs” toward revenue durability and unit economics—and bringing a much higher degree of precision, accountability, and diagnostic value to the new loyalty economy.

In this article, we explain how executives and investors can use the principles of CBCV to better understand and measure the value of a firm. The methodology works whether the company features a predictable, subscription-driven revenue stream (think of Netflix and Verizon) or a base of active customers who place discretionary orders every so often (think of Uber and Walmart). We also discuss how companies can benefit from providing investors with more of the right kinds of customer data—and how investors can avoid being fooled by vanity metrics that appear to be useful indicators of customer behavior but aren’t as meaningful as they might think.

A More Precise Way to Forecast Revenue

The premise behind CBCV is simple. Most traditional financial-valuation methods require quarterly financial projections, most notably of revenue. Recognizing that every dollar of revenue comes from a customer who makes a purchase, CBCV exploits basic accounting principles to make revenue projections from the bottom up instead of from the top down. Although this may seem like a radical departure from traditional frameworks, that’s not the case: CBCV simply brings more focus to how individual customer behavior drives the top line.

What do we need to implement CBCV? In addition to the usual financial statement data, two things are required: a model for customer behavior (what we call the customer-base model), and customer data that we feed into it. The model consists of four interlocking submodels governing how each customer of a firm will behave. They are:

the customer acquisition model, which forecasts the inflow of new customers
the customer retention model, which forecasts how long customers will remain active
the purchase model, which forecasts how frequently customers will transact with a firm
the basket-size model, which forecasts how much customers spend per purchase

Bringing these models together enables us to understand the critical behaviors of every customer at a firm—who will be acquired when, how much they’ll spend over time, and so on. Summing up all the projected spends across customers gives us our quarterly revenue forecasts. Together, these models can produce much more precise estimates of future revenues streams—and from that, one can make much better estimates of what a company is really worth.

This basic model is universal, no matter what kind of business a company is in. Exactly how it is specified, however, depends on the company’s business model—in particular, on whether the company is subscription-based or not. At a subscription-based business, such as a gym or a telecommunications firm, managers generally know how much customers will spend each month, and they are able to directly observe when customers churn out, because they literally cancel their contracts and close their accounts. This simplifies how the retention and purchasing submodels are built.

Most companies, however, are characterized by discretionary (that is, nonsubscription) purchasing and unobservable customer churn. If you have an Amazon account but decide never to buy from the company again, for example, it’s difficult for anyone inside or outside Amazon to immediately recognize that. Marketers call this latent attrition. Accounting for it requires more-complicated submodels, but marketers have developed methods for predicting it extremely well.

Peeking Inside the Black Box

Although this methodology may seem daunting, it’s relatively simple to get going, and it can be refined and extended as appropriate for particular business contexts.

Let’s peek inside the black box through an example. Imagine that you’re the founder of a young, fast-growing, subscription-based meal-kit company. In its first four months of operation, your company generated $1,000, $2,500, $4,500, and $7,000 in total revenues respectively. You would like to understand what this means for future revenues and the overall viability of your business. As a start, you want to forecast revenue in month five.

Let’s suppose that active customers pay a flat fee of $100 per month for meal kits delivered over the course of the month, and that the company acquired 10, 20, 30, and 40 customers, respectively, in its first four months of operation (100 in total). Half the acquired customers churned out in their first month; all customers who did not churn out in the first month have remained.

The first step in forecasting month five revenue is to figure out how much revenue will come from retained customers. Of the 100 customers acquired over the first four months, half, or 50, will still be with the company in month five if historical retention trends persist. Thus, the portion of month five revenue from retained customers is $5,000 (50 x $100). The next step is to forecast how much revenue will come from new customers. Assuming that acquisition trends continue, you can expect an additional 50 customers, representing $5,000 of revenue. By adding up the two forecasts, you arrive at a total monthly revenue of $10,000.

Using the CBCV approach, revenue numbers no longer exist in a vacuum. Instead, they are a direct function of a small set of behavioral drivers—in this example, total customers acquired, retention dynamics, and average revenue per user (ARPU). This framework makes revenue forecasting easier and serves as a diagnostic, helping managers and investors understand where the value creation is coming from (and what questions to ask when results are out of line with expectations).

Of course, few companies will have such simple models and neat patterns as our meal-kit example. Our purpose here is to outline the general mechanics of the approach, as extensions of it follow naturally. Suppose, for example, that your firm has tiered pricing (it also offers a second plan that delivers twice as many meals a month for $189). In that case, you would need to account for variable ARPU from period to period. If the firm allows customers to skip deliveries or make discretionary purchases, you would need to track order frequency and average spend per order. If the firm pivots to sell meals à la carte instead of on a subscription basis, you’ll need to use a model that predicts how often customers will place orders. These extensions add complexity to the model, but the basic process to incorporate them would be the same as in the example above. If you want to extend the time horizon beyond month five, you can repeat the calculation for multiple months. That gives you a long-term revenue forecast, which is vital for corporate valuation.

For an in-depth discussion of the CBCV methodology in complex scenarios, see our academic papers “Valuing Subscription-Based Businesses Using Publicly Disclosed Customer Data” (Journal of Marketing, October 2016) and “Customer-Based Corporate Valuation for Publicly Traded Non-Contractual Firms” (Journal of Marketing Research, March 2018).

Looking at Customers from Inside and Outside

The richness of the insights that can be derived from CBCV depend on how much access the person performing the analysis has to internal company data. A corporate executive would have full visibility of all customer data. A private equity investor assessing an acquisition target would typically have access to transactional and CRM data. For subscription firms, that would include the length of contracts, periodic payments, and observable churn; for nonsubscription firms, it would include the timing and size of each individual purchase. Access to other behavioral data, demographics, marketing touchpoints, service interactions, and the like would further enrich the CBCV analysis.

For those on the outside looking in—hedge funds, Wall Street analysts, regulators, and others—detailed customer data might be impossible to obtain on a regular basis. They may, however, have access to the firm’s customer cohort chart, or C3, which tracks revenue by acquisition cohort over time and shows how total customer spending changes as each cohort ages. (For an example, see the exhibit “C3: A New Tool for Corporate Valuation.”) Many large, reputable firms (both subscription and nonsubscription) have begun to disclose their C3, among them Slack Technologies, Dropbox, Lyft, and luxury marketplaces the RealReal and Farfetch. A firm’s C3, along with the number of active customers and the total number of orders, is sufficient to give investors a good understanding of customer behavior.

The customer cohort chart is straightfoward: total revenue, period by period, broken down by customer acquisition cohort. Though its format may vary, the C3 is increasingly finding its way into companies’ public filings, giving investors a powerful tool for gauging what a company is really worth. This example of a C3 comes from Revolve Clothing’s 2019 SEC filing.

If a firm can’t or won’t release its C3, investors should press it to reveal four key metrics: the number of active customers (in total and the percentage from tenured customers, or customers who have been with the firm for over 12 months); gross acquired customers over the most recent period; revenue (total and percentage from tenured customers); and the number of orders (total and percentage from tenured customers).

While we would strongly encourage firms to disclose more, having three or four years’ worth of these disclosures (from past filings) is enough to run a CBCV model and assess the overall health of a company’s customer base, albeit with greater uncertainty about future revenues.

Trending Toward Transparency

Few companies currently provide all the data outsiders need to perform CBCV, for a variety of reasons. First, disclosure of customer metrics is voluntary, and companies feel little to no pressure to make them available. Second, there is little consensus about which customer metrics are the most informative and how those metrics should be calculated and reported. And finally, policy makers and regulators have been largely silent about these issues, leaving disclosure to companies’ discretion.

Unfortunately, executives often have a “less is more” mentality regarding disclosure. They fear that additional disclosure, however aggregated the numbers may be, could put them at a competitive disadvantage or open them up to potential litigation or regulatory scrutiny. Successful firms worry about how investors will react if the metrics they’re disclosing start going in the wrong direction. And customer-level forecasting often remains siloed in the marketing department; managers in finance and related functions are unaccustomed to incorporating customer behaviors in their revenue forecasts and are more comfortable using traditional methods.

In the absence of investor pressure and regulatory standards, firms can arbitrarily choose which metrics to disclose, generally selecting those that paint an overly rosy picture for the investment community. The metrics are often defined improperly, based on faulty assumptions, or framed incorrectly.

Think about the story your customer metrics would tell if disclosure were required.

Consider Peloton, which sells high-end home-exercise equipment and monthly subscriptions to streaming-video fitness classes. When it filed its pre-IPO S-1, in August 2019, it chose to disclose its customer lifetime value (CLV) per subscriber, boasting a CLV of $3,593 in its most recent fiscal year. To its credit, Peloton also disclosed the underlying formula it used to compute its CLV, but that formula left much to be desired. The most glaring problem was that it did not account for the time value of money, and instead simply added more than 13 years’ worth of future cash flows without discounting them. Applying even a modest discount rate would slash its CLV by more than 50%—a drop with significant implications for the health of the customer base. As more firms voluntarily disclose customer metrics, analysts must be vigilant about vetting data that may be misleading or is mostly window dressing.

Although Peloton’s metrics are far from perfect, they nevertheless represent an encouraging shift toward transparency around customers that will be good for shareholders, companies, and customers. Shareholders will increasingly rely on customer data to evaluate potential investments as more purchases are made online and traditional brick-and-mortar metrics, such as same-store sales, decline in relevance. Executives can use customer data to build the case for investing in activities that will generate long-term value for the firm and to communicate to shareholders the impact of those investments on CLV and other long-term metrics. Customers will be treated as strategic assets whose value should be cultivated over the long term. This mindset will be a welcome change from the status quo, in which shareholders, lacking the information needed to assess long-term customer profitability, compensate by pushing firms to hit short-term performance measures.

Until the CBCV revolution fully takes hold, what does all this mean for you? If you are an investor, don’t ignore the customer-related metrics that may be tucked away in financial reports; actively seek them out. If the data you need isn’t disclosed, demand it, or find alternative sources that can serve as effective proxies. Focusing on unit economics will almost certainly reveal opportunities you can exploit.

If you’re an executive and you aren’t currently disclosing your customer metrics, start thinking about the story they would tell if disclosure were required. If you would not be proud of your metrics as they stand, this is your golden opportunity to refocus on and improve the health of your customer base in the dark. It may not be long before market participants demand sunlight.

Daniel McCarthy is an assistant professor of marketing at Emory University’s Goizueta Business School and a co-founder of Theta Equity Partners, a customer-based corporate valuation solutions provider.

Peter Fader is the Frances and Pei-Yuan Chia Professor of Marketing at the Wharton School of the University of Pennsylvania, a co-author of The Customer Centricity Playbook, and a co-founder of Theta Equity Partners.