Monthly Archives: January 2011
Is it feasible that companies are not customer centred because it is possible to thrive without being customer centric? Before you dismiss this out of hand consider the following examples.
Mary Portas: Secret Shopper – last nights episode on the furniture industry
On Wednesday I watched the tv program Mary Portas: Secret Shopper which took a look at the furniture retailing category and found that it was anything but customer centric.
The marketing across the category is either misleading or downright deceptive. There is one kind of sale or another on almost around the year. The discounted prices on the furniture are nothing of the kind. And the price guarantees are absolutely worthless because the retailers know that it is simply not possible for the customer to buy the same product from another retailer.
The focus of the sales staff is selling irrespective of whether the furniture meets the needs of the customers. The sales folks even convinced themselves that they were customer centric when it was blatantly clear that they simply did not get what it means to be customer centric: to put yourself in the shoes of the customer and thus help the customer to make smart purchasing choices that they will be happy with – no buyers remorse when they got home. In fact it can be argued that the sales folks were doing rather well by not being customer centric: one of them claimed to have earned £57,000 in commission just through standard selling.
Management simply wrote off the people who felt aggrieved about poor quality of the furniture and the poor customer service. Yet despite the negative reviews on the internet on CSL (the furniture retailer featured on Mary Portas: Secret Shopper) I do not see it closing down because customers are running to its competitors. Why is that?
Because all the furniture retailers are at it. They are all misleading customers with their marketing and price promises. They are all getting customers to buy whatever makes the most commission for the sales folks. And they are all offering poor customer service. I believe that I wrote about how easy it is to become customer centric by disrupting category practices
comes 8th in the latest Which? customer satisfaction survey
Tesco is the UKs most successful supermarket brand. You might then assume that it would rank highly in any customer satisfaction survey. Well Which? polled 12,000 consumers and placed Tesco 8th with a customer satisfaction rating of 48%. Aldi scored 65%, Lidl scored 64%, Morrisons scored 59%. You can find the full details here.
Does this mean that you can thrive without being customer centric? Or does it mean that there is little or no correlation between customer satisfaction and financial success? Perhaps it means that the Which? survey is flawed. You decide.
BSkyB goes from strength to strength
As far as I am aware BSkyB is not a brand that is loved by consumers. My own experience of dealing with BSkyB was less than positive. And yet BSkyB keeps going from strength to strength. Recently it announced that at the end of 2010 it had over 10m customers (thus hitting one of the key targets) and half-year profits were up 26% on last year.
Is it possible that BSkyB is thriving because it has an effective monopoly on pay tv? So if you want what Sky has then you have to go and buy it from Sky. That is to say that BSkyB owns strategic assets that allow it to deliver less than great customer service. I believe I wrote a post on the value of strategic assets.
Is it because it has branched into adjacent areas: telephony and broadband? Is it because it offers bundles (pay tv, telephony, broadband) that other players find hard to match?
Or am I wrong and BSkyB is a great example of a customer centric organisation?
TalkTalk continues to be the second largest broadband provider.
TalkTalk is the UKs second largest broadband provider. The negative reviews posted on this company by customers are legion. It is a company that was investigated twice by Ofcom (the industry regulator) last year as a result of customer complaints. And Ofcom found it guilty of breaching telecoms regulations when it charged customers for cancelled services.
If customers are so dissatisfied then why is it that TalkTalk has not collapsed? Or at least shrivelled significantly?
Is it because they are locked into existing contracts? Or is it because far too many customers simply are not willing to go through the inconvenience of switching broadband suppliers because they consider them to be pretty much the same. Does this remind you of the furniture retailing example that I started this post with?
I find it interesting that on the one hand the CMO is often given the leadership role in improving the customer experience and on the other hand the marketing function is one of the prime culprits in generating customer dissatisfaction, calls into the call centre and customer churn.
How exactly does the marketing function contribute to customer unhappiness, negative word of mouth and customer churn? By misleading the customer – sometimes unintentionally but often intentionally. Lets make this real by sharing some examples:
Recently Vauxhall (GM brand in the UK) has had to change its Lifetime Warranty advert after customer complaints. Why did some people complain and get the ad changed? If you read the small print you find that the Lifetime Warranty is not a lifetime warranty in the sense that the normal person understands it. Specifically, the warranty covers only the first 100,000. And it applies only to the first owner – the warranty is not transferable to later owners.
How many people will buy a Vauxhall car without reading the small print and then be disappointed? How many of these customers will then ring the contact centre to complain? How many will go on to tweet about their negative experience?
My wife shops with La Redoubte regularly so she was pleased when she got a promotional offer through the post. She proceeded to spend a considerable amount of time and psychic energy in choosing the two garments she wanted. Then she range the contact centre to place her order. Only after she had placed her order did she find that she could not get the promotional discount: apparently the promotion did not apply. Yet the agent could not explain why not – at least not to my wife’s satisfaction.
Result: my wife is no longer an advocate and a loyal shopper that La Redoubte can take for granted. I will be writing a post about this soon to draw out some insights.
In the UK, the mobile operators are advertising very favourable offers. When you look at the offers you find that at a price point in the 18 month contract, the customer has to reclaim a certain discount (that is used to advertise low monthly charges) and has to use specific procedure and complete this procedure in a specific time.
The marketing thinking behind this is clear: you can get customers because the pricing looks attractive and yet the customer’s end up paying more because the redemption process has been designed to make sure that only the most diligent customers will successfully redeem the discount. How many of these customers will ring the contact centre to complain? How many are being taught to distrust marketing communications?
Then you have my BSkyB experience that I wrote about back in September 2010. Where I shared my story of how I was lured in by the slick marketing promising a bundled offer and an easy life only to find a very different reality: How to turn an advocate into a detractor?
Are these the only companies that are engaged in these practices? No. I am not pointing my finger at these ‘bad’ companies – they are no better and no worse than the majority of companies. Why is that? Because the practice of misleading customers either through sloppy communication or deliberate manipulation is widespread. It is even considered good marketing!
I can think of six reasons why many publicly quoted companies continue to make slow, painful, progress towards customer centricity:
- They are publicly listed enterprises and they are expected to be shareholder centric not customer centric;
- They make a significant part of their revenues and profits at the expense of their customers and are not willing to forgo the practices that deliver these ‘bad profits';
- They are designed to make and sell standard products not to create and deliver customer experiences;
- They are structured into silos and each silo has its own agenda, priorities and metrics that makes it rather difficult to play the joined up game of customer experience;
- The Tops are totally divorced from the day to day reality of the way that the organisation works (just watch Undercover Boss); and
- They seem to believe that customer centricity lies in the realm of the marketing function rather than a total transformation in business philosophy, corporate strategy, management mindset and organisational design.
What do you think?
It strikes me that organisations can take a big step forwards in becoming customer centric simply by measuring, reporting and talking about the impact of their actions on customers and the value that customers represent to the business.
Allow me to illustrate this by using a consulting experience at a brand name telco. One of the things that really matters to customers is how easily, quickly, effortlessly, conveniently they can get a replaced handset if they have an issue with their existing handset. The functional department that is charged with this task is the Device Logistics.
What do you think the focus of the typical Device Logistics function is? The focus of the function is, typically, on devices, operating cost and service levels. As a result management talk about and measure the no of devices that needed to be shipped, no of devices on back order, lead time between ordering and receiving handsets, no of devices shipped, no of devices delivered to the customer address within the SLA, productivity and cost of operations.
Not once did I hear conversations about customers, nor the impact of policy and practices on the customer’s life or attitude towards the company.
Now imagine thinking about the Device Logistics function in terms of impact on customers. If such an approach was taken then management would be measuring and talking about the following types of matters:
- How many of our customers have been impacted by our delivery process in the last month?
- How many customers have we lost as a result of our policies and practices?
- How much revenue, profit, lifetime value has walked out of the door as a result of these policies and practices?
- What kinds of customers – Gold, Silver, Bronze, Young, Professional, Older – are we losing?
- What will it cost the business to replace these customers with new customers so as to replace the revenue, profits and lifetime value that has walked out of the door?
- How many potential new customers have we lost as a result of the bad word of mouth from existing customers who have been disappointed by us?
- What is the cost associated with this bad word of mouth?
- How many customers ended up calling the contact centre to ask questions and/or make complaints about the handset replacement process?
- What cost did the business incur in dealing with these customers – their questions, their complaints?
- How many hours did customers spend waiting for us, at home, to receive their replacement handsets? What is the cost to our customers of this waiting?
- How can we do away with the biggest cost and inconvenience – making them staying at home all day – we impose on our customers?
- What would be the impact on customer retention, customer loyalty, as a result of designing the handset replacement process from a customer perspective?
- How can we engage our customers in the handset replacement process so that we all come out as winners?
Thinking in terms of customers and impact on customers – in terms of customer satisfaction, customer retention, customer loyalty, word of mouth, brand reputation – can be applied to every single function that touches the customer.
My assertion is that organisations will only make the transition towards becoming customer centred, designing and delivering better customer experiences, when the organisation as a whole and silo’s in particular think about operations in customer terms. Specifically, the impact of operational practices on customer retention, customer loyalty and word of mouth.
What do you think? Have you seen this in practice? If so where?