Monthly Archives: October 2010
If a Tops (senior management) want to do CRM then the organisation can just go ahead and buy some software for the sales function, the customer service function and even the marketing function; good luck with automating the marketing function – something only for the brave!
If the Tops want to reduce operating costs then the organisation can do six sigma, lean,BPR, enterprise wide ERP and CRM systems, outsourcing, offshoring etc.
If the Top want to make it easier for the customer to do business with the company then the organisation can engage in Customer Experience: looking at how things work and redesigning moments of truth.
If the Tops want to just get more bang for buck out of their marketing and customer services investments then the organisation can invest in a customer insight specialists, expensive data mining packages, lots of data and data management, propensity models and real-time decisioning systems that promote the right product, to the right customer, at the right time with the right offer.
If the Tops want the organisation to be outstanding then the Tops need to grapple with the WHY. Why the organisation exists? Its purpose. Simon Sinek has done a great job of surfacing the importance of purpose (WHY) and the need for all values, decisions, actions to flow from that: outwards from purpose. So I have attached a link to his blog.
Why is WHY important? In the UK we have a number of mobile operators. Vodafone, Orange, T-Mobile and 3 are the big network operators. If you look at what they do, what they offer they are all pretty much the same.
Yet if you look at Virgin Mobile, that is a different story. That is because Virgin Mobile knows what the Virgin brand stands for. And because of that Virgin Mobile can decide what kinds of actions are in line with the purpose and which are not. I can vouch for that as I have touched Virgin both as a customer and as marketing services provider.
On the British Psychological Society’s Research Blog there is an interesting piece on how “Speakers with a foreign accent are perceived as less credible – and not just because of prejudice”
I have often wondered how it is that even though I am originally from the Indian subcontinent I, at some level, am uncomfortable when an agent on the telephone line has a thick Indian accent. The article – to my relief – makes it clear that it is not necessarily because I am prejudiced.
It appears that at the limbic (brain) level we are wired to treat information coming from a foreign accent as being less credible. The interesting piece is that even when the participants were made aware of this bias, it did not affect the bias towards the heavy accented speaker. For the lightly accented speaker the bias was countered.
So the implication for offshore call centres is clear: focus on the accent. I cannot help but think that many people in the offshoring industry already knew this at an intuitive level.
At a personal level I read JonathonFields blog. Today Jonathon has written a post that gets to the heart of the customer orientation. The key point that he makes and which is at the heart of the customer orientation is this:
“…..you’ll solve most of your business problems by spending more energy figuring out how to best understand your customers’ lives, psyches and challenges, then working to solve your customers problems and deliver delight to their doorsteps.”
You can read his full post here.
Reading the mountain of ink that has been written on all things Customer (strategy, insight, experience, service, CRM) one would be forgiven for concluding that it is a difficult if not impossible task for a large organisation to become customer centred. You have to come up with a great strategy, to segment your customer base, to work out LTV, to build propensity models, to implement complex CRM systems, re-engineer processes, overhaul the call centre and employ an army of change specialists to get the culture change you want.
Commenting on the disbanding of the Consumer Focus (the body that sought to persuade organisations to put consumers at the heart of they do) she states that a great way to gain a competitive edge is for marketers to challenge category norms. She says, get the team together and really get to grips with the following question: “How is our category currently letting people down?”.
What does she mean? She illustrates by using example from three industries:
- budget airlines force customers to ‘uncheck’ the insurance option twice. Why? Because it makes more money for the budget airlines.
- mobile network operators deliberately make their pricing plan complex so that it is difficult for customers to compare apples with apples and also because the operators make more money as customers typically end up on more expensive plans.
- supermarkets who deliberately put the milk and eggs at the back of the store so as to force to walk past tempting goods and thus make impulse purchases that they never intended to make when they first came in the store.
She goes on to mention that the Virgin brand claims to put this approach at the heart of its business model: it strives to seek out practices that are self-serving and customers find unfair within a category and sets about changing them in a way that creates value for consumers and the Virgin brand.
So there it is. To become customer centric an organisation simply has to give up self-serving category practices that exploit the customer rather than build goodwill with the customer. It does not involve business process re-engineering, lean, customer service offshoring, multi-million pound investment in CRM systems and so forth.
The question within each category is which organisation is willing to go first? The organisation that is best placed is the category leader and yet the category leader is the one organisation that is least likely to do so. And the category laggards often do not think that they have the luxury of sacrificing the short term for the longer term. That is why category disrupton falls to the likes of Virgin, Apple, Amazon, Charles Schwab and so forth – organisations that are not invested in the existing way of doing things.
I once did some customer experience consulting with a category leader who had thousands of pricing plans which caused a big headache in the billing systems. The case for simplifying the price plans was compelling from many angles. Yet the Tops (people at the top of the organisation) vetoed the change every time the idea was suggested – it had been suggested many times over the course of many years: the company was making substantial revenue and profit from customers that were on out of date, expense price plans!
Back in 1997 Heskett and Sasser published The Service Profit Chain. A book that asserted and showed empirical evidence for the link between a strong customer service orientation and higher profitability. The book that influenced me to make the transition from the back office (finance) to the front office (marketing, sales, service).
Today Valeria Maltoni (Conversation Agent) wrote a post declaring that ‘the most influential thing a company can do is to have a strong customer services culture: 55% of people recommend a company based on that experience.’ She bases this assertion on the latest research published by Harris Interactive on behalf of RightNow Technologies for the North American market. This survey also states that 40% of customers started doing business with a company solely based on their reputation for great service.
In 2010 Harris Interactive is telling us what Heskett and Sasser demonstrated in the Service Profit Chain back in 1997. It is also something that most of us know from our own experience. Over a week ago I was at a one day conference and one of the speakers spoke about how well he was looked after his insurance company after a motor accident. What was the reaction of the audience? First surprise. Second, please tell us the name of your insurance company.
Given the choice we do business with the companies that do a good job of taking care of us – those that have a strong customer service culture.
Yet despite the research and our intuitive understanding of the importance of Customer Services, this function does not get the executive attention it merits. Companies continue to invest heavily in marketing whilst looking to all kinds of means to cut the cost base associated with the Customer Services function.
Today the Guardian reported that the average FTSE100 chief executive earns £4.9m per year or 200 times the average wage. Clearly these executives are delivering the results their shareholders want through other strategies such as moving into new markets, investing heavily in targeted marketing and aggressive cost cutting. I have been there before – that was the early 1990s before the rise of the relationship marketing and CRM.
I predict that the companies that underinvest in Customer Services today to make short-term revenue and profit targets will pay the price in the longer term. But then that is a price that has to be paid by future CEOs and shareholders.