The Peet’s – Razorfish Deal is the Future of CEM Partner Strategy
Although you might have heard about it on April 1, it’s no joke. As reported in this AdAge article, Peet’s Coffee & Tea and Razorfish have inked a deal whereby the agency’s compensation for services is entirely determined by the fate of Peet’s e-commerce profits. It’s a brave move by both companies, and it may not work — this time. But I think it represents the future of the kind of deep, intimate, and trust-based relationships with service provider partners that are necessary for many companies if they are to survive and thrive in the era of customer experience management.
Pay for performance isn’t new, but it holds an undeniable attraction for any buyer who’s suffered through 5000 too many sales pitches from product and service providers. If the solution really is absolutely certain to increase productivity, reduce costs, boost conversions, and find the car keys lost under the sofa . . . why do vendors want guaranteed, up-front payment regardless of the benefit? The answer, of course, is that the value ultimately delivered often depends on many things far outside of the vendor’s control. Brooks Brothers can put you in a nicely tailored suit, but they can’t be sure you’ll shine in the interview and get the job. A WCM vendor can supply a solution that supports every aspect of your web presence, but they rarely control implementation and system architecture, user training and adoption, site design and optimization, or the innumerable other factors that influence the success of a web initiative.
CEM is different, and for different reasons than many would have you think. First, it’s not about meeting some specific KPI in some particular line of business, in the way of a call center tool or sales force optimization software. We call CEM an imperative because, as noted in our insight paper, “the quality of the customer experiences you offer and support will increasingly determine the fate of your company.”
Second, despite the prevailing rhetoric (and the desire of business leaders to put the CEM challenge into a familiar box), customer experience management is not just a problem for the marketing department. It’s not just about getting more prospects through the funnel to conversion. CEM demands a holistic response because . . . well, because of what it names and addresses: The entire customer journey (not just the prospect sales cycle); every aspect of their experience (not just web-centric or digital interactions); and the management of any and every company activity that can influence these experiences or the consumer’s attitude about them (not just the surface-level customer touchpoints).
Third, all of this means that few if any companies can go it alone — and that their relationships with service providers have to quickly evolve beyond the antagonism and suspicion that too often characterizes them today. (As documented in this AdAge article and noted in my recent blog post.)
The Peet’s – Razorfish deal is unusual, if not unique, because it goes beyond pay for performance to pay for profit. As explained in AdAge:
“We were looking for something that got a company really tied to the results of the business so they had equal skin in the game,” said Jon Weinberg, VP of strategy and e-commerce at Peet’s. If Razorfish stopped at “the revenue line,” it would be less invested in Peet’s spend and marketing program “than if they could look down to the profit line and help us retool our programs in a much deeper way.”
Weinberg doesn’t say so directly (and may not realize it), but the importance of this deal — for Peet’s, for Razorfish, and for the corporate response to the demand for CEM more broadly — isn’t about the established business paradigms of “skin in the game” and mutually “invested” interests. It’s about an agency being allowed, and encouraged, and (from a revenue perspective) required to “help retool programs in a much deeper way.”
That’s a huge shift, but it’s indicative of the bold steps and transformations that are now necessary to address the CEM Imperative.