On this episode, Chris Kuenne joins Betsy and Tony to share his 30+ year journey that started at Johnson & Johnson as a Franchise Marketing Director. He has since launched and sold a customer marketing business to Publicis for over $600MM. Chris also teaches a High Tech Entrepreneur course at Princeton University. His most recent stop on his entrepreneurial (and philanthropic) journey is at Rosemark, where he and his team are building quantitative personas as a method of measuring relationships between customers and brands.
For most big brands, NPS is a good way to start a marketing story, but it’s just one chapter. Important decisions should not be made based on over-listening to the results from one customer (who could be unprofitable); instead, Rosemark creates a bigger picture to help tell the full story, and more importantly, predict future purchase behaviors.
“This is not customer satisfaction at all costs. It’s customer satisfaction among those customers who are aligned with your brand proposition.”
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About Chris Kuenne
Chris Kuenne, founder of Rosetta and Rosemark, is a highly successful entrepreneur, business builder, best-selling author and member of Princeton University’s faculty. For more than 30 years he has been fascinated by the question of what motivates people to act as they do in a commercial context. He has devoted his career to translating insights about customer motivation into personalized sales and marketing techniques that accelerate enterprise growth.
He is now focused with his colleagues at Rosemark on applying these growth techniques to build a family of interdependent companies in customer marketing, focused on enhancing consumer lifetime value through next gen personalization. He published a Wall Street Journal best-selling book entitled, Built For Growth, with his Princeton colleague, John Danner, on how the Personality of the Founder defines and shapes how new ventures grow and scale. Chris is a frequent speaker to various business leadership audiences, including the Young President’s Organization (YPO), venture capital associations, in addition to the American Council for Growth (ACG) and the CFO Roundtable, among many others. He is an active contributor to Forbes and a range of other leading industry magazines and journals such as Advertising Age, Banking Strategies and Pharmaceutical Executive. He has also appeared on CNBC Street Signs, Forbes podcasts and other media outlets.
Prior to founding Rosetta, Chris co-led the retail marketing practice at First Manhattan Consulting Group, following 10 years in marketing management at Johnson & Johnson, where he led the Band Aid® and Tylenol® brand franchises. Chris serves on various corporate and nonprofit boards.
Chris received his MBA with Honors from Harvard Business School, and his BA from Princeton. He and his late wife, Leslie, raised three sons, Peter, William and Matthew. He lives in Princeton, NJ, and Shelburne, VT.
Deepening Customer Relationships By Going Beyond NPS With Chris Kuenne
Dissolve The Seam Between The Customer And The Company
Betsy, I’ve got to tell you. I am so excited to bring our audience this particular episode. Chris Kuenne is an amazing individual and a brilliant mind. I know our audience is going to pick up on that as we go through this conversation.
A couple of things that stand out to me and I want to bring these out so that the audience is reading for them. His perspective of NPS or Net Promoter Score. It’s a good tool. It’s a great tool, but where do we go next? Looking at the combination of NPS and lifetime value and the value that customers bring to the table with their wallets. Being able to segment both using NPS and lifetime value amongst other attributes in that into what he calls Quantitative Personas, which has new company Rosemark is developing and creating now.
Tony, this was a great interview. I’m also very excited for the audience to read a lot of the concepts. The one thing that jumped up to me in our conversation was this idea of dissolving the seam, which is a phrase I had not heard before. It’s about how do you minimize that gap between your company and your customers. As I mentioned, that’s something that we aspire to in the work that we do with the Customer Advisory Boards. How do you bring them into the fold and make them an extension of your team and, by default, dissolve the seams? I’m excited to hear him expound on that concept as well.
One of the things that makes this show so great, Betsy, is I’m the analytical nerd looking at lifetime value and you’re looking at the relationship of customers and companies. I love it. This is why we make such a good team.
I was thinking the same thing, too, because the stuff that you nerd and geek out on is stuff that goes right over my head and I get into the warm, fuzzy stuff and together, it works well. With that, we are very happy to welcome Chris Kuenne. He is the CEO of Rosemark. He’s had a phenomenal career, is very successful, done a lot of cool things that you’ll get to hear about in this interview. Without further ado, we’d like to welcome Chris Kuenne to the show.
Chris is the CEO and Founder of Rosemark, which is based in Princeton, New Jersey. We’re excited. We have so much in common to talk about, especially as it relates to customers. Chris, I’m going to go ahead and turn it over to you and ask you to give us your background and what led you to this point of where you are now.
Betsy and Tony, thanks so much for inviting me to your show. I started my career at Johnson & Johnson, where I rose up to be the Franchise Marketing Director of the Band-Aid brand. For those of you reading who have children, I’m the guy responsible or accountable for putting decorations on Band-Aids. I then moved on to briefly run the adult Tylenol franchise, which is the largest business at J&J.
While I was at Johnson & Johnson, which was about a ten-year period, I discovered a problem in the way market research was integrated with marketing strategy for brands and decided to start my own firm called Rosetta. It’s not the language company but ultimately a business that was a digital marketing agency and technology company. We built Rosetta from exactly $0 million dollars on day one to $250 million on the day that we sold it to the Publicis Groupe for nearly $600 million.
Since selling Rosetta, I’ve been busy writing books. I teach at Princeton and I’ve now started a new company focused on the same basic principles of Rosetta, but focused on the customer marketing side of digital marketing, as opposed to the acquisition and customer marketing side. I’m thrilled to share some thoughts and insights about how customer marketing works. At least our view of it and hopefully be helpful to your audience.
Chris, before you get started on that, I’m curious. How did you get into the whole customer marketing thing? What led you to even prior to J&J that gave you that passion for the work that you do?
I have a funny short story on this. When I was in college, I was a history major and studied a lot of Victorian novels. Believe it or not, I believe that Victorian novels and customer marketing are very similar. They’re similar in the fact that when you’re reading a very complex novel, you’re following the plotline. You’re trying to understand the characters deeply.
That’s what marketing is all about. It’s deeply understanding the characters in the novel and in marketing, it’s the characters in a marketplace. It was a hop, skip and a jump from Victorian novels into marketing. I will add one other thing. I was a faculty brat. My dad taught economics and so I spent a lot of time around the dinner table understanding how econometric models actually began and understand how markets work. A little bit of economics, a little bit of Victorian novel and whizzbang, I was a marketer.
I’m a history major and economics minor. I’m going to say that history background of understanding how to analyze things and go after original research probably had a little play in there too.
I think so. As a quick aside, I’m a big believer that in your undergraduate career, you should study the humanities and social sciences. Then if you so choose, go to business school or law school or whatever. In fact, the course that I teach at Princeton is based on this very point. We have a lot of engineers in the class but at the same time, we’ve also got a lot of humanities students and bringing those two together to crack Harvard Business School cases is a wonderful way to get to the truth and better strategies.
It’s so funny connecting these dots because my son was also a history major and is now a Customer Success Director for a logistics company. There must be something to that. History as the precursor to a career in customer-facing roles.
I would’ve said, “Because we couldn’t get a job elsewhere,” but I don’t think that’s true.
Let’s talk about your customers, Chris. Tell us a little bit about your business, who you’re serving and how you’re serving them. Give us the whole rundown on the work you’re doing now.
We’re in the very early stages of building out Rosemark. At Rosetta, we built a consulting business focused on understanding consumers with an advanced process that we call personality-based segmentation. From that base, we ended up acquiring and building the business out to be the size I talked about. This time in building Rosemark, we’re doing it in a slightly different way. We’re starting with the IP.
We’ve built some intellectual property that we call quantitative personas and by combining this method of deeply understanding your consumer along with capital that we’ve lined up with from Newlight Partners, a Soros Fund, we are out acquiring businesses and then we’re going to infuse those businesses with the quantitative persona technology. We’re in the early days of developing customers for quantitative persona and in the early days of looking at companies that we can acquire that we’ll build out the platform.
We’re looking for three different companies. Insight and strategy companies, because it all begins and ends with deeper customer insight. Data and analytics companies that can convert what some people call the digital exhaust, those behaviors that are left behind out on the internet and convert that into deeper insight. And then a loyalty platform that ultimately is customer-facing and provides loyalty and CRM capabilities based on the data, based on the consumer insights to drive lifetime value.
It sounds like it. Is this mostly in the B2C world?
That’s right. As we were talking about before the show, we have had a reasonable amount of experience in B2B and all of our clients are businesses but they’re businesses that, for the most part, serve the consumer as opposed to other businesses.
Talk a little bit more about this idea of quantitative personas. I know you took us through this before the show but diving into that. I’ve got some follow questions based on what you’ve shared with us briefly.
Thanks for the question, Tony. It turns out that we really can, with the right questions and the right math, discern how the softer parts of who we are as people drive our economic behaviors for a potential brand. Let me illustrate. In the quick-serve restaurant and fast-casual restaurant business where we’ve built one of these QP models, we can understand how your motivations and your preferences drive your decision to go out to eat, where you go to eat and how you divide your stomach, as it’s known, share of stomach, across different quick-serve restaurant brands. Whether you tend to use the app or whether you like to sit in the restaurant and socialize with your friends and family.
What we are able to do is take these softer, what is often known as psychometric measures, and explicitly connect them to purchase behaviors and understand how your motivations drive your behaviors. This is particularly important now where a lot of the behavioral modeling, in other words, looking at the point of sale data or loyalty data and guessing what your intention is. Most of that’s played out. For brands who are looking for an edge against their competition, they need to go to the next step beyond the point of sale data and into the motivations and preferences and that’s what quantitative personas do.
It essentially gets to this “Why behind the what” because most quantitative research in the past has always been about what behavior has happened but they could never define the why behind it, which is where you might go to qualitative research like ethnography or focus groups or anything of that nature. Your quantitative method gives a different approach here, is what you’re saying.
That’s an excellent way to say, Tony. In fact, you use the very phrase we do, “The why behind the what.” Certainly, focus groups and ethnographic studies are great ways on a qualitative or one-off broad-based understanding. The problem with a focus group or an ethnographic study is you can’t score your database to understand the reds, the blues and the greens. In our language, the quantitative persona 1, 2, 3. Our method is designed to do some of the same discernment as to the qualitative side.
This is the reason we call it quantitative personas. We’re able to build a model based on consumers’ behaviors observed through point of sale and other data on them individually and predict, not perfectly, at a fairly high level of accuracy, what their quantitative persona is. It allows us to translate what you might learn in an ethnographic study into the marketing automation stack and all the magic that’s been developed over the last fifteen years to scale personalized marketing.
Chris, what are your thoughts on some of the other things that are out there, such as NPS and some of these other ways to measure that? A lot of times, we hear two different schools of thought on that so I’d be interested in hearing what you think about that.
I’m actually working on an article on that exact topic. The Net Promoter Score was genius. It’s genius because it’s simple. It’s genius because it’s been adapted because it’s simple. It’s a very powerful way, we believe, to measure the overall health of the relationship between your brand and your customer. It’s a terrific tool and it’s incredibly simple. It’s now become part of the tool chest or the vernacular of the way customer marketing companies think.
There are a couple of issues where NPS is not the complete story. It’s not the complete story, not because it’s NPS’ fault. It’s just that NPS didn’t go out to try to solve the next problem. We believe the next problem is that whenever you look at customer cohorts, however you analyze them, we use a quantitative persona to put people into these distinct groups, you see that every brand has a very dramatic profit skew. Let me illustrate. In retail banking, checking accounts and savings accounts, everybody always talks about the Pareto rule or the 80/20, 20% of your customers are 80% of your business.
In retail financial services, the top 20% of your customers are about 300% of your profit, which means that there are a whole lot of customers that are underwater. One of the things that NPS does not do and, frankly, it wasn’t built to do, is to understand the value of the customer who’s giving you the NPS rating for your brand. It’s our theory that you need to profit stratify.
In other words, understand the profit tiers of your NPS scores because there’s a danger in going out and getting a low NPS. Going off and doing something that’s probably very expensive to change in your customer marketing or your customer experience to solve a problem for customers who are not valuable. Perhaps even worse, maybe unprofitable for you.
It’s our conjecture and we’re doing research on this now that the best way to leverage NPS is to understand what the drivers of NPS are and what the profits strata is within each NPS score. Hopefully, over the coming months, we’ll have QP, quantitative persona, as a de-averaging method for NPS. Which QPs have higher and lower NPS scores? Therefore, which QPs are contributing to your enterprise value, in other words, profitability in which may not be.
A lot of the work that I’ve been able to do with companies for the last many years, we look at the qualitative, the feedback on the surveys as an example. We have a particular methodology where we layout things like the profitability of the customer segments. We look at what type of feedback they have, the profitability they have and we begin to create these segmentations. Again, as you’ve said, we recognize that lifetime value is a driver that we have to look at for these businesses.
There are some businesses and I won’t name brands but I was in conversations with them and they would say, “We only need to improve customer satisfaction.” I said, “Why don’t you make your product free then?” They’re like, “We can’t do that.” Your customers would be happy. They start to get the point of lifetime value and satisfaction. You have to link the two of them. I love this approach that you’re taking and I can’t wait to see the results of that.
Thank you, Tony. I love the point you’re making. This is not customer satisfaction at all costs, your example. It’s customer satisfaction among those consumers or customers who are aligned with your brand proposition, for whom you can add more value to them or serve them better than your competitors can. There’s this stair-step thing that says, “What’s my NPS, for whom, why and now, what do I do about it?” Not just, “What’s my NPS? I better go fix that problem.”
I ran across a situation not too long ago in my work. I was talking with someone and they got one piece of feedback and said, “We need to do something about that. We need to change that.” Taking a little bit and making big decisions based on something that may or may not even be valuable or relevant or profitable, makes so much sense to me.
Chris, talk to us a little bit about what you’re doing. I’m fascinated by the work you’re doing at Princeton. I’m a mentor in the entrepreneurship class at the University of Dayton and I love working with these students. I’d love to have you expound a little bit on what you’re doing at Princeton and who you’re working with and what you’re seeing with these students and what got you compelled to do that?
First, every time I stand in front of the class, I think, “I won the lottery. Here I am in front of these amazingly brilliant and highly energetic students.” One of my jokes with my colleagues is that, “I think the students are learning faster than we’re teaching them,” which is a polite way of saying it’s so much more about them than it is about us. Thank you for the question. It’s one of the things I enjoy most in each of my weeks. I teach a course called High-Tech Entrepreneurship. The course is focused on how you think about going from an idea to a scaled business that is technology-driven. We stepped through literally each of the elements of how you do that.
From the minimum viable product to the growth hypothesis, to building teams to operating in an ecosystem, I even do a little lesson on the form of segmentation we talked about and ultimately, how you finance growth, then how you exit. It’s enormously fun. I’m so proud of the students we have and, frankly, how much I learn. I feel like I should be the one paying the tuition because I learn so much from them. The class is based on Harvard Business School cases to work through each of these elements.
In some of these cases, I’ve taught 16 or 17 times, which some might feel like, “How do you that?” I have to tell you that with brilliant kids, you learn something new every single time you go through the case. The other thing is that the world’s changing so quickly that the context in which they think about the case from 3 years ago or 5 years ago or even 8 years ago versus now is dramatically different. Hopefully, we’ll spawn a few successful entrepreneurs. Because Princeton is a liberal arts university, most importantly, I hope that understanding a little bit more about how entrepreneurship works is what I would believe part of a good education.
How do we audit your course then?
That’s also what I was going to ask. I was thinking, “I want to take this class.”
I haven’t been involved in Coursera or any of those things but I am thinking about maybe taking two or three of the cases or classes and try to create a little mini-course for people to watch online. I’ll let you guys know if we get to that step. Like you guys, there’s never enough time to chase after all the things you love to do.
I find it fascinating. Betsy and I are working on our second book. You’ve written books. You understand working on a book could take years. As we’ve talked to different CEOs in this show because we look at different stages of the life cycle. We don’t take a particular stage or size of a company typically. What we’ve been able to determine is there’s a different way to listen to at each stage of the company. That’s why it would be interesting to see how your course unfolds and tie that to the whole aspect of how to listen to your customer at every stage of that growth cycle.
That is a wonderful phrase. “There’s a different way to listen at each stage.” I completely agree, but that’s quite an elegant way to say it. Can you give me an example because that resonates with me, but I’d love to hear more about how you guys approach that?
If you take a pre-startup, someone who’s thinking about an idea. We interviewed a gentleman and he started out with this idea because he was an Army Ranger. He trained the Rangers how to scale the cliffs. He noticed that the rope protector that they use, which was like an old hose or something like that would tear and he almost lost a man under his command because the rope started to tear.
He came up with this idea. In the initial phase, as we’re listening to different entrepreneurs, it’s like listening to the environment, listening to what’s happening out there and it’s listening to yourself, “What would I need? What would I love?” Very quickly, as you move into that garage stage, you start to listen to, “Who would my core customers be? Let me go listen to them.”
It progresses into, “Now, I need to listen to who’s going to be the purchasing agent or the decision-maker.” In that early stage, that first year or so of developing an idea, you switch between who you listen to very quickly and if you don’t, you’re going to miss the ability to sell your product and get into the first stage of scaling, which is coming out of your garage, if you will.
I think that’s a terrific metaphor. In fact, it relates to what we were talking about because if you’re over listening to your unprofitable low NPS customers, you could end up heading in the wrong direction. Another aspect of what you said connects directly to the course I teach. One of the texts we use in addition to the book John Danner and I wrote is called Crossing the Chasm. It is brilliant and Crossing the Chasm speaks to exactly the point you’re talking about in terms of how you use your terminology, how you listen to different cohorts who adopt technology at different rates.
The major a-ha from that work is that the cohorts themselves are not referential to one another. In other words, the early adopters are not references the early majority. The early majority has to come upon learning about the product and to take away the hurdles of adoption on its own, as opposed to actually listening to the early adopters. This idea of who’s listening to whom, when, is a wonderful way to think about this.
Chris, what’s on the radar? What’s your big vision for where you want to take the company, what you want to achieve, what you’re focused on in the long-term?
I’m an innovator. In the terminology of our book, I’m a driver. The book we wrote was about different types of entrepreneurs. I’ll start internally drinking my own medicine here and I’ll play that into what I’m doing. What makes me tick is identifying a market gap and then obsessing over this idea of product-market fit. We believe we’re onto the next major issue of product-market fit in marketing technology and insights. We’ve touched on this a little bit but I’ll start from the beginning and that is that customer marketing, this is not acquiring customers this is deepening your relationship with existing customers.
Fred Reichheld, who’s quite a famous pundit on this and a consultant at Bain, was probably the first one to measure that a dollar spent against your customer has about five times the return versus the dollar spent in the market to acquire a new customer. It’s our belief that this is going to be further accentuated as the rules and regulations around first-party data get tighter. Being able to convert insights out of first-party data into deepening your customer relationships, we believe, is the next major wave in digital and, for that matter, all of marketing.
We have a rather bold objective, which is to build from scratch the next leader in customer marketing based on what we’ve talked about before. In other words, converting these insights about the customer into more effective relationship marketing that deepens the relationship and ultimately drives lifetime value. If we’re successful, two or three things will happen. First, at every analyst meeting, when the Wall Street analysts are asking a CEO of a customer or a consumer-driven business how it did in the last quarter, one of the first questions will be, “How did the lifetime value of your customers advance or decline in the last quarter?”
We believe lifetime value combined with the Net Promoter Score is one of the most pure ways of determining the financial implications of whether your brand and your process and your services are enhancing the relationship with the customer. In other words, they’re buying more and generating more profits for the shareholders. That’s one meta-level goal.
The more down-to-earth goal is, we intend to build a business of $300 million or $400 million or $500 million in revenue that’s entirely focused on enabling the largest marketers in the world to do that. Break that into pieces, provide both the services and the technology that allow big brands to measure, manage and optimize lifetime value over time, so they can give that CEO the right information to be able to tell Wall Street why the stock price should be higher.
What’s your why behind doing this? I’m curious because you are lit up about this topic. What drives that behind the scenes?
I guess 2 or 3 things. The first one is, we’ve mentioned this at the top of the show that is growing up as the son of an economics professor, it’s like you don’t get dessert if you haven’t made some interesting comment about supply and demand or how econometric models work. I would say that built into my very sort of nerve and sinew of who I am is an intellectual curiosity about how things work. I think one way of describing customer marketing, whether it’s in the B2B or B2C arena, is that the goal is to dissolve the seam between the customer and the company.
In this almost thought construct, if your company understood your customer as if the customer were in the company, that company would grow far faster. I think part of the drive is a pure intellectual curiosity about, “That’s a neat theory. Can we make that work?” Quantitative personas and the other things we have been talking about are methods and processes that begin to dissolve the seam between the customer and the company.
The second reason is deeply philosophical and emotional for me. After selling Rosetta, I made enough money to not have to work anymore and so you look at yourself and say, “What am I going to spend all this time earning money?” All the money that I make going forward will go to a foundation. While I’ve been very lucky in my professional career I’ve been very unlucky in my personal life.
My five-and-a-half-year-old daughter, Olivia, was killed in a terrible freak accident, now 24 years ago, and 2 years ago my wife died of ovarian cancer. I’m working to put money into a foundation to memorialize their love of art, the Olivia and Leslie Rainbow Foundation. It’s the destination for all the winnings of what we do in this round. There’s an intellectual drive part of it and there’s a very strong emotional desire to memorialize my late daughter and my late wife.
Chris, I’m so sorry to hear that’s happened but what a wonderful way to bring something good from a tragic situation. When you were talking about art, I had the good fortune to go to the art exhibit at Princeton. I’ll never forget. It was such a great experience. I’m sure you have spent more than a 1 or 2 in there.
Yes, you’re talking about the Princeton Art Museum. It’s spectacular and in fact, Princeton’s now building a new museum on that very site. Make sure you come back in a few years because it’s going to be even more amazing.
It knocked my socks off. It was absolutely spectacular. Chris, what else would you like for our audience to know about you and the work you’re doing? Anything else you want to put out there or anything that our audience can do to support your efforts?
Thank you. I’m very proud of my younger sister. Her name is Carolyn Jeppsen and she has started a nonprofit called BroadFutures. She’s committed the latter part of her career to helping young people on the spectrum become mainstreamed and economically productive. Every year, she touches about 40 or 50 young people between about 18 and 25 and helps them get internships and build the skills so that they can have full-time jobs. I’m so proud of my sister, Carolyn, and the organization that she’s built.
It’s very good to know about that because I think that’s obviously something that touches a lot of families. I’m absolutely happy to share that. Tony, any other final questions for Chris?
I think I’ve asked every question I can come up with. Chris, this has been an amazing opportunity to chat with you. I look forward to having you back on the show down the road as you make more progress and I’d love to hear where things go for you.
Thanks so much. Tony and Betsy, thanks for the honor to join you on your show. I’ve read to a number of your shows in preparation and I’m so impressed with the guests you have and the way you help them tell their stories. Thank you for that and for the chance to do it here.
Thank you, Chris. We appreciate it. We do want to stay in touch. Tony, you said you’d asked all your questions. I’m thinking I have 9,000 more questions I want to ask. Unfortunately, we don’t have time for that but I definitely would love to stay in touch, Chris. This has been an awesome conversation.
Thank you. Have a great day. Take care.
I loved sitting here listening to Chris. I want to sit in his classroom and go through that course that he has because his mind is brilliant. The way he sees the world, the way he sees, if you will, the evolution of brand strategy and customer segmentation to this idea of quantitative personas blows my mind. I understand where he’s going. I know I’m not at the level he’s at but I understand where he’s going with it and it blows my mind to see what might be possible in the very near future with quantitative personas and this idea that he’s bringing forth.
He clearly is a visionary innovator, a driver and all of those things that he mentioned in a very humble way, I might add. He is definitely all of those things. To me, it’s very inspiring to think that people like that that have been there, done it, don’t have to work that hard anymore, are giving back by teaching this class and working with these moldable young minds, sharing what he’s learned along his journey. I find it to be extremely inspiring. I feel very honored that he was a guest on our show.
Thank you so much for joining us. We’ll see you next time.