On why organisations are reluctant to open up to customers

I read an article in the Telegraph today by the chaps who wrote the delightful Yes Minister and Yes Prime Minister tv series.  One part of the article – Yes Minister Sir Humphrey has all the solutions –  struck me as being highly relevant to the topic of opening up the enterprise to customers.  Here it is:

“From: Sir Humphrey Appleby

To: Bernard Woolley

Subject: Transparency

I understand your anxiety about the new government’s fixation on ”transparency’’, but you are distressing yourself unnecessarily. It afflicts all incoming administrations. It used to be called ”open government’’, and reflects the frustrations they felt when they were in opposition and could not find out what was going on, combined with an eagerness to discover and publicise the deception, distortions and disasters of their predecessors.

But it does not last beyond the first few months. As time passes they realise they have more to lose than to gain from public knowledge of what they are up to. Each month increases their tally of catastrophic misjudgments, pathetic deceptions, humiliating retreats and squalid compromises. They very soon come to understand that sound and effective government is only possible if people do not know what you are doing. The Freedom of Information Act was the greatest blow to firm and decisive administration since the execution of King Charles I. Quite soon our new masters will realise that secrecy may be the enemy of democracy, but it is the foundation of government.”

From the customer perspective transparency is great, for organisational leaders it does not look that attractive.  We all want to look good and avoid looking bad.

Every Customer Experience / CRM change agent should read this book

Any and every person involved in organisational life can benefit from reading this book.  It is a must read for anyone who is a change agent.  Everyone working on getting a better alignment between the customer and the organisation will benefit from reading and applying the insights of the book.

The book is written by Barry Oshry and it is called “Seeing Systems: unlocking the mysteries of organizatonal life“.

If all the people working on / impacted by Customer initiatives – Strategy, Insight, Experience, Engagement, CRM – read and applied the insights then I am confident that their organisation can save a lot to money, time, effort and heartache.

Incidentally Barry also has a blog: The Seeing Systems Blog

The critical flaw at the heart of modern customer relationship thinking

When I was working as a Senior Consultant with The Peppers & Rogers Group the customer paradigm was explained through the analogy of a small grocer (or florist) serving his/her local community.  The thrust of it was that the grocer got to know the customer- the person, his circumstances, his shopping history, his attitude, his values, his beliefs, his preferences – and used this knowledge to offer him the right products, at the right time, at the right price in the right way.  The end point – this is important – we have the technology to recreate that kind of business relationship with our customers.

What the analogy leaves out is the social context.  In days gone by the local grocer (or any other shopkeeper for that matter) was living in the same community as his customers.  He was likely to come across his customers in the social life of the local community.  Some of the customers used to be fellow students at school, others went to the same church, others frequented the same pub, others were friends of friends and so forth.

In short the grocer’s relationship with his customers was much a social one as an economic one; he experienced his customers as rounded multi-dimensional human beings not as one-dimensional economic objects nor as abstractions on a revenue statement. Because of the shared local context the customers also invested in the grocer – they knew the grocer in a rounded context and not just as an economic entity, a grocer.

Furthermore, the owner was also the CEO and the person having the daily contact with customers – listening, talking, interacting, serving customers.

That situation today for Mr Multi-National Enterprise (Mr MNE) is completely the opposite.  There is no social relationship between Mr MNE and the customer – they typically live and move in very different social circles.  The customers do not have to support Mr MNE (like they did with the grocer – else no local grocer) and Mr MNE can find other than local customers – the world is full of potential customers.  And importantly, Mr MNE is completely divorced from the customers – he never has to see, talk with or serve a customer.

So whilst the technology exists to gather information, the all-powerful social context that is necessary for building enduring mutual win-win relationships is absent.  And that is the critical failing at the heart of modern customer relationship thinking.  It misses the fact that relationship are a natural by-product of a social context.  That social context  is missing from the modern corporate world and it cannot be recreated in the typical tenure of the CEO.

Does power lead us to dehumanise our customers?

I read an article on how power leads us to dehumanise others and wondered is it as simple as that:

  • Is that why large organisations can come across as being scornful of their customers?
  • Does that explain the phenomenon of organisations becoming more and more disconnected and less and less respectful of their customers as they succeed and become established in the market place?
  • Does that explain why monopoly suppliers act as they do?

You can read the article here.

Incidentally, an infamous experiment was carried out by Zimbardo and his colleagues at Standford University – The Standford Prison Experiment – which suggested pretty much the same thing. You can find that here.

Why customer efforts tend not to deliver what the customer wants

Many large organisations have been soaked by the waves of CRM and Customer Experience.  Money has been spent on CRM software, teams have been set up to change processes, call centres have been outsourced or brought back in-house, CRM teams have been set up and some organisations even have Directors and VP’s of Customer Experience.

Yet the divide between what customers expect and what they experience when interacting with large organisations continues to be a large – customers are not satisfied.  Churn rates are high in industries where it is easy for customers to change supplier. And many CRM and Customer Experience team leaders are burnt out and/or have become cynical.

This got me thinking on why it is so hard for organisations to become customer centred.  Then I thought about it differently:  why do must CRM and Customer Experience teams struggle to make a significant impact on the quality of the experience that the customer receives? The answer is quite simple if we use a computer analogy.

The possibilities and limits of a computer system, in the final analysis, are set by the operating system; computers are simply pieces of metal or plastic without the operating system.  That means that we cannot take a software application such as Microsoft Word and make it run on a UNIX operating system – they are simply incompatible.  That is what is just so.  Microsoft Word has been designed to work with the Microsoft family of operating systems e.g. XP, Vista, Windows 7.

Now the funny thing is that I have never come across an instance when someone has attempted to run Microsoft Word on a UNIX platform.  Yet that happens all the time in the world of business.  That is what many organisations are doing when they attempt to impose CRM and Customer Experience programmes into / onto the organisation.

Organisations also have an operating system that primarily consists of strategic objectives, executive mindset, culture (what we consider to be important, how we do things around here), organisational structure (typically functional), business processes and the technology infrastructure.

Many, if not most, organisations are running operating systems that are simply incompatible with CRM and Customer Experience programmes.  These operating sytems are used to talking at the customer not listening to the customer; ‘changing/moulding’ the customer to meet the organisation’s needs not changing the organisation to meet the customer’s needs; treating all customers the same not treating different customers differently; focussing resource on conquesting new customers rather than doing the hard work of building sustainable relationships with existing customers and so forth.

Which is why most CRM and Customer Experience teams and initiatives struggle and many fail to deliver.

Focus your customer efforts on cultivating “share of heart”

Marketers are concerned with conquesting a “share of mind” on the belief that if they stake a position – occupy valuable real estate – in the customers mind then the customer will seek out their brand.

CRM orthodoxy speaks of winning and growing a “share of wallet”.  The objective is to find ways of incentivising the customer to spend more and more with you.  A good example is Tesco – it has branched out into clothing, into electrical goods, into financial services, into mobile telephony and so forth.

If you want to build sustainable competitive advantage on the basis of creating customer loyalty then focus on growing a “share of the customer’s heart”.  The mind can be reasoned with.  Volvo may own the ‘safety’ real estate today and someone may be able to claim that real estate tomorrow.  The heart cannot be reasoned with so lightly.  The heart is much sticker.  The more that you grow a share of heart the more you will cultivate reciprocity – the customer will want to pay you back for the good heartedness that you have shown him.

Allow me to share my personal story with you.  Lets start with Amazon.  I have been doing business with Amazon since the beginning.  My relationship with Amazon was a mental (logical) one – it is easier and cheaper to buy from Amazon so I will continue to buy from Amazon.  Then one Christmas I received a present:  Amazon sent me a letter to let me know that I am a valuable customer and with the letter came a coffee mug.

Amazement and delight. I was simply amazed that Amazon had acknowledged and thanked me for being a customer – no organisation had ever done that before.  By that act alone Amazon had staked a place into my heart. How?  By acknowledging my existence, my contribution, my worth; acknowledgement is a fundamental human need.

Several years later Amazon went on to grow  its share of my heart by treating me well when I needed Amazon to fix a problem.

Two or three years ago I was planning to go on holiday in North Africa and I ordered some travel books.  And I was eager to get them quickly so that I could do the research and reserve flights and accomodation.  Well the books did not arrive when they were due to arrive.  I waited several days and became agitated that Amazon had failed me when I needed them.

I decided to contact Amazon by phone as I wanted to deal with the issue there and then.  By looking at the Amazon website I easily found a telephone number to ring.  When I did ring that number someone answered the call quickly.  At this point I was prepared to do battle with the Amazon rep.  Instead I was greeted by a friendly voice.  The voice asked me what my problem was and actually listened.  The voice empathised with my situation.  The voice told be that the books had been despatched many days ago.  The voice apologised that I had not got the books and the upset that had caused me.

The voice asked me what I wanted.  Amazing – the voice did not tell me what Amazon policy is, it asked me what I wanted.  I said that I needed Amazon to get the books to me the next day or to cancel the order so that I could go and buy them from a physical store that day.  The voice told me that a fresh set of books would be despatched that day by special courier and be with me the next day.   By the time I got off the phone I was relieved and delighted with the humanity of the interaction.  That Amazon employee had grown “share of heart”:  wow, this is an organisation that makes it easy for its customers to contact them and then treats them as human beings, as friends, as family.  In short, I had been treated with respect – a fundamental human need.

The next day, the books arrived exactly as promised – on time and in perfect condition.  That sealed the deal.  At that point Amazon had grown its share of my heart to 100%. How?  Amazon had delivered on a third and incredibly important human need – trust.

Since that day I give Amazon the first bite at the cherry and almost always they get my business even when they are more expensive.  Why?  I trust them.  They have treated me well and it is my turn to reciprocate.  I want them to grow, to be healthy – so that they can continue to treat me and the rest of their customers well.

Now Sky, despite its great marketing, is a completely story.  Through its marketing it had won a “share of my mind”.  So that when I was looking at a pay-tv, broadband and telephone bundle I went with Sky.  Then Sky went on to do the opposite of Amazon.  That is a story that I will save for another post.

How to bring the customer into the heart of the business

Most businesses want the benefits of higher customer loyalty: higher revenues, lower operating costs and higher profits.  Put differently, customer loyalty enables the business to operate as a monopoly supplier.  The problem is that in a competitive landscape customer loyalty has to be earned.  It is earned by creating value for customers; value is created when needs/wants are are met in a way that exceeds the customer’s expectations.

Over the last ten years or so, organisations have, collectively, spent billions on CRM systems and programmes.  The vast majority of these investments failed to deliver.  They failed to deliver increases in customer loyalty and the associated benefits.  Some would argue that the CRM investments – mainly in technology and process change – resulted in a poorer experience for front line employees and the customers.

Out of the ashes of CRM arose Customer Experience.  The purpose of Customer Experience programmes is to improve the customer’s experience of the organisation.  A fundamental part of customer experience programmes is to get access to the Voice of the Customer – to get the customer’s view.  The access to the customer’s view is typically gained through some kind of questionnaire – an example is the Net Promoter Score (NPS) questionnaire.

Whilst Customer Experience programmes are a step in the right direction, they are not enough.  By definition programmes have a start and end date – typically because they are seen as a one of fix, not part of day to day operations.   Also there are several problems with the conventional approach to getting access to the customers voice.  Specifically:

  • the questionnaire is only carried out periodically – typically once or twice a year;
  • the questions are determined by the organisation and/or its agents (research agency) and so may not get at what matters to customers;
  • the findings of the research are often summarised so that all connection with individual customers is lost and the findings can be shaped to fit internal biasses;
  • executives (and employees) are insulated from the customer voice – they get access to summarised, abstract, reports;
  • there is no feedback loop back to the customer – he/she does not know if he/she has been heard by the organisation.

A much better way of getting access to the Voice of the Customer, engaging customers, orienting the entire organisation towards customers and generating customer loyalty is to create a cafe where customers are always invited and they can talk with the employees of the organisation.  I am thinking of a on online cafe which is open to all customers and all employees of the organisation.  It is special type of cafe.  It is a cafe where the customer orders take the form of:

  • Compliments – this is what I alike about you, I thank you for x,y,z;
  • Ideas – here is an idea that I have on new products, new services, what you can do differently etc;
  • Complaints – this is what I am not happy about and I am looking for you to do something about it.

Now imagine all these orders (conversations) are aggregated and displayed as a giant tag cloud.  What customers like appears in green.  What fails to meet customers expectations appears in red.  And areas of opportunity (the ideas) appear say in orange.    I am thinking that this always on Voice of the Customer is displayed on every laptop, every office, every floor – so that the Voice of the Customer is always present.

Clearly the the company will have to take part in the conversation.  It will get back to the customer and let him/her know what it is doing or intends to do on what the customer has shared.  Some of the conversations would be one to one.  Other conversations could be more like announcements.  For example, identifying all the customers that have complained about delivery and letting them know what steps are being taken to fix the issues and when the customers can expect to see results on the ground.

Whilst this is a bold step, I am confident that it is a useful and even necessary step to building customer centred organisations.

The spark of this post was ignited by a conversation with a colleague that I had not seen for 7 years.