Monthly Archives: April 2011
Theory: marketing communications cultivate loyalty
Recently I wrote a post on customer loyalty – Why Companies Are Struggling in Cultivating Loyalty – and one of the readers brought up the subject of communication. In his words:
“…………..It’s critically important that companies create an ongoing dialogue with customers to determine their preferences and then create solutions to meet those needs.
One way companies can nurture the overall customer relationship is to determine the best method of communicating with customers (voice mail, e-mail, text messaging, social media, direct mail) and when they would like to receive information. Once they have determined the appropriate channel for communicating, companies can engage customers in a highly personalized and tailored way.
Companies that actively engage with customers on a regular basis can proactively offer additional products, services and information that cultivates customer loyalty.”
What is the reality as opposed to the theory?
First let me say that there will be an array of realities – one for each company and even within the company the reality will be different for each customer. Given that context let me share with you the findings from a report (Data Wastage Report 2011) commissioned by Transactis (a company focussing on data and customer insight services):
- 65% of consumers said that companies have sent them offers for products they would never buy even though these customers had previously handed their personal details and preferences to these companies;
- 58% of consumers said that some companies have sent them offers to become new customers even though they are existing customers of these companies;
- 52% of consumer said that companies have repeatedly tried to sell them products that they have already bought.
Furthermore another Transactis report (Customer Trust 2010) highlighted the following:
- Around 80% of consumers do NOT see any of the firms they buy from using their personal data to make attractive offers and deliver good customer service.
So what is the impact of all this on the 2000 UK consumers that were surveyed?
- 86% of consumers say they would withdraw permission for a company to even contact them if it continues to send them irrelevant communications;
- 88% of consumers say they would refuse to hand over any more personal information if they continue to get these irrelevant communications;
- 81% of consumers say they seriously question the competence of companies that ask for details that they have already given to the company
My take on this: reality is much messier than theory
Some kinds of communications can cultivate loyalty. I can remember that some years ago I received a thank you letter and plastic coffee mug from Amazon (with no sales related offers) and that surprised and delighted me. The result was that my loyalty was cultivated. I have also written about three other instances where the communication left me touched and loyal:
- Customer Centricity: a tale of two clinics
- A great example of using relationship marketing to deliver a memorable customer experience
- Why you should not confuse personalisation with personal
The kind of communications that do cultivate loyalty are not the ones that marketing departments typically produce and distribute. Why? Because, these communications tend to be self-serving and rather impersonal (even if they are ‘personalised’) rather than customer-centric and personal. Put differently, these communications do not create value for the customers that receive them: it can be argued that whilst 20% of customers may find them useful, 60% of customers are indifferent, and the remaining 20% are left annoyed and think less of the company sending out this ‘junk mail’. What looks like success (ROI) on a campaign by campaign basis may be failure when viewed on a longer time scale.
What does it take to deliver good customer service in B2B?
A little while back I wrote the following post: Do you care about your customers? This led to one reader asking about the difference between B2C and B2B customer service. In this post I share with you the key lessons I have learned in the 20+ years I have spent in the B2B professional services domain.
The first point that I want to make is that customer service is distributed across the organisation: it is a fundamental and common mistake to see it as being housed in the Customer Services (or Support) function. The second, point is that customer service starts right at the front: the sales process. If you get that right then it is likely that you have set the climate for a fruitful relationship.
Now allow me to share with you my guidelines for good customer service and fruitful relationships in the B2B domain.
1a: Select your customers carefully to ensure fit
Not every customer is right for you and you are not right for every customer. Why? At the rational level it is simply a question of fit. If you look at it from the customer perspective:
- do you have the expertise to help me get my job done (outcome)?
- will you treat me the way that I want to be treated (approach, process, style)?
- can you do the job for the kind of price that I am willing to pay?
- can you mitigate my sense of risk and give me the assurances I need?
When you, the supplier, look at the customer and what he wants, you have to honestly assess if you can provide what the customer is looking for. And you have to do a full risk assessment. What exactly is the risk of taking on this organisation as a customer?
The trouble is that this fit assessment is either not done or is moulded so as to deliver the outcome that is desired by the sales folks (and their managers); seeing what you want to see, being over-optimistic, ignoring / downplaying what goes against your desires are three powerful human tendencies. And when the deal is big enough then just about everyone who matters colludes in this delusional thinking. The people who do not collude (often those who have to deliver on the promise) are excluded.
1b: Qualify the customer for chemistry
The second part of this assessment is one of chemistry. If you are the supplier then you have to ask yourself the question: will we get on? This is about the human stuff:
- do our cultures mesh, rub against each other or clash?
- will be get along with the key people that we have to interact with?
- will they get on with us?
The chemistry question is a huge one and has big impacts on the success or failure of the work that you are doing for your client. Yet, it is one that is mostly ignored. In B2C you can get away with taking on the wrong people as customers. If you do the same in B2B someone will pay the price. I have seen a promising Partner’s career ended abruptly because he failed to get this right. Personally, my most difficult account was one that the sales folks had taken on as the business was desperate for new revenue and which for which we all knew that there was no fit and chemistry: the relationship ended badly after just two months or so.
2: Ensure that there is a clarity of expectations
The second guideline is to make sure that during the contracting process there is a two way educational process going on. You, the supplier, are actively unearthing the customer’s expectations on what will happen, how it will happen, where it will happen, who will do what etc. And you are making sure to educate the customer so that he is not faced with unpleasant surprises further down the road.
It is your responsibility to make sure that the customer has a clear, detailed, understanding of the journey ahead, what obstacles you might encounter, how you plan to get around these obstacles, what he is expected to do etc. A good way to do this is to look for and spell out in writing all the assumptions that you (and the customer) are making. And assess what is likely to happen if those assumptions turn out to be incorrect.
At this stage the temptation is to act like a teenager on a first date: to show only the good stuff and hide the bad stuff. If you want to deliver good service and cultivate a fruitful relationship then you must resist this temptation. It is critical that you are honest and educate the customer on the upside and the downside. And when it comes to the downside you can work with the customer to come up with a plan for how to manage it. For example, if I priced a job at £200k then I’d advise the client to budget for and inform his manager that the job was going to cost £250k. I was helping him to manage his risk, his reputation, in his organisation and that was valued.
If you have done Steps 1 and 2 rigorously then you have rendered good service. How? You have learned about the customer. And you have educated the customer on what he needs to know. Based on this both of you decide either not to do business or to do business. If you have chosen to do business then you have done so with your eyes wide open and a clear understanding of what is involved and what to expect of one another. And you have made sure that you can actually deliver what each of you has promised.
If you don’t do these steps (which is common) then you end up in a situation where a $1m engagement ends up $2m in the red; you threaten to sue the client and he threatens to sue you. Or in the case of EDS you are on the hook to pay BSkyB some £200m for a botched CRM implementation on the basis that EDS mislead BSkyB: claiming expertise that did not exist. In the case of a major telco you end up paying substantial amounts in fines because the sales guys consistently promise stuff that they know that the delivery organisation cannot deliver in the agreed timescales.
3: Ensure that the person who sold the deal is on the hook for the delivery of the promise
If you spill the milk and I clean it up then I educate and encourage you to continue spilling the milk. This is the situation in B2B where the folks making the sale (and the promises) walk away once the deal is closed.
If you want the sales folks to do their bit right (Steps 1 and 2) it is essential that they are held accountable for the promises that they make. This can take many forms including:
- ensure that the sales person also does the client account management role and thus has to face the customer and the music;
- withhold 50% or more of the sales person’s commission until the assignment is completed and make sure that he only gets it if certain measures are hit including customer satisfaction, account profitability; and
- give the sales person a stake in any follow on work that happens say over the next three years after the first deal is delivered.
When you have sold the deal, have to face the music and have a financial stake in a long term relationship then you tend to do what it takes to deliver on the promises you have made. I remember, creating some hell, going all the way up to the COO and the CFO to help the support team get essential hardware to support my client’s e-commerce operation. I also remember battling with HR to get one of member of the delivery team (supporting one of my accounts) the daily subsistence amount she was due. Why? To make sure she was on the ball after all she was the project manager responsible for delivering a $1m+ assignment that I had sold.
4: Keep your customer in the loop and make sure that there are no surprises
The fourth pillar of good B2B customer service and relationship is keeping each other in the loop and making sure that you do not spring unpleasant surprises on your customer. As the supplier, it is your job to put yourself in your customer’s shoes and figure out what your customer wants to know about (because he has told you) and needs to know (because you would want to know if you were in his shoes).
This is more than communication: computers can communicate and that is not enough. What I am talking about is CARING: caring about your customer so that you strive to anticipate and provide the information, the advice, the proactive help that the customer needs or is likely to need. An important part of caring is involving your customer in making decisions that are going to affect him. And if this is not practical then letting your customer know what decisions have been made and how that will impact him and his organisation.
Despite our best efforts the world does not run to our individual plans. So surprises crop up and some of them are going to have a negative impact on your customer. So it is your duty to think through the impact and come up with an action plan to put things right. I remember getting some really unwelcome news (five days from go live) from the project manager on a high profile CRM implementation for a strategic account and one of the most important telco’s in the world.
We convened a team to explore this torpedo, came up with a plan, lined up the resources to deal with it. Then I flew out to Helsinki to talk it through with my customer as I was his account manager. While he did not like the news he was blown away by our caring as illustrated in our honesty, our well thought out action plan and willingness to fix the issue at our expense. To do it I needed him to push the go live date back by two weeks. He agreed, the experts flew and the system went live successfully two weeks after the planned due date.
Now the interesting thing is that we could have kept this critical problem secret, blamed it on his team (for not doing the testing properly) and let him have egg on his face shortly after the system went live. He would probably have lost his job. We didn’t let that happen because we cared about our clients and living up to our promises: the person who spotted the critical flaw was one of the more junior application developers.
5: Build a personal relationship by showing appreciation
Business is a team game between people. And in my view William James got it right when he said “The deepest principle in human nature is the craving to be appreciated.” So appreciate people. Pick up the phone and talk to them – use whatever excuse you need to say ‘Hello, how are you? What are you up to? What’s happening in your business?” Send a “thank you” email or ‘Here is something you may find useful” email. And when the opportunity presents itself ask what they like doing – their hobbies? If your customer is an avid football supporter and you are too then share that. If they have children and you have children then talk about children. But do not fake it: find common ground that is genuinely common.
If you have the budget then take your customer out of the office. What I have learned is that environments matter: in the office most customers behave as ‘customers'; outside the office most customers behave as social human beings. So take every opportunity to meet with your customers out of the office environment and in more relaxed environments. For example: put on an event for your customers that provides them with business value and social value where they can play golf, drive 4×4 vehicles, break bread and drink wine with you etc. My favourite is to combine selling, customer service and socialising at personal level with my customers over lunch.
I have found the metric that shows I have built up that personal relationship. Here it is: I invite my customer to come over to my house for a meal, he agrees and then actually does come over for a meal. And those moments have been some of the most memorable moments of my professional life.
6: Thank them and release them
Sometimes the best thing that we can do for our customers (and ourselves) is to stop doing business with each other. This comes about either because we made a mistake getting together in the first place or because the situation has changed and we are no longer suited to one another.
I have taken over accounts to find that both parties are in an unhappy relationship. The fit and the chemistry died long ago. Where possible I have made the effort to reinvigorate the relationship. And where this has not been possible I have had a straight conversation with these customers: I have thanked them for the business, explained why it was best to part company (for both of us) and then recommended a more suitable supplier for them.
If you bear your customers interest’s at the forefront of your mind in the separation process then you are likely to find that it works. Some of my strongest business friendships have come about through this process. I did not just cut my customer loose, I actively went out and found a better solution for my customer and helped him to migrate over to that solution. You can do the same.
Only 17% of companies scored ‘strong’ or ‘very strong’ on customer loyalty
I read the following post - ‘Customer loyalty – does anyone care? and that got me thinking. The author is highlighting the research carried out by the Temkin Group that shows that only 17% (24) of the 143 companies surveyed scored a ‘strong’ or ‘very strong’ loyalty’ rating.
Many underestimate what it takes to be strong/very strong in customer loyalty
In my opinion a lot of people who write on customer experience, customer loyalty and customer-centricity simply do not get how hard it is for large established companies to deliver on this stuff. For these companies becoming customer-centric, delivering a great experience and generating loyalty is as likely as goals in the average soccer match – a rare event. Why is that?
An old quote that sheds light on the matter
There is a really good quote that gets to the heart of the matter, let me share it with you:
” A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it” Max Planck
What am I saying? I am saying that a big change in the customer-centric direction is highly unlikely until there are changes in the following domains: business models, business leaders, management mindset and organisational structure.
Plenty of companies are doing well without being customer centric or delivering great customer experience
The fact is that plenty of companies do well without being customer-centric. I explored this topic in the following post: Who says you have to be customer-centric to thrive
You can do well because you have strategic assets and I gave an example here: Bewleys shows that an organisation with strategic assets can deliver a poor customer experience and get away with it.
Existing business models are a huge obstacle in generating customer loyalty
I explored the issue of business models and how they get in the way of any customer-centric initiatives in the following post: ‘Contrary to popular opinion it is easy to become customer centred’
The organisational climate – mindset, culture, structure – is another big obstacle
If you are a gardener you will know that you simply cannot throw seeds anywhere and expect them to sprout into healthy, tall plants. It is the same with organisations. The way that organisations are structured, led and managed has a big influence on what kind of initiatives flourish and which struggle to take root. I explored this in the following posts:
- Why customer efforts tend not to deliver what the customer wants’
- Functional design is the elephant in the room
- The core challenge facing the customer experience designer
Do the customer experience designers have what it takes to design experiences that generate loyalty?
And finally I took a look at the customer experience designers themselves and questioned whether they have what it takes to actually design customer experience that work for customers: The problem with Customer Experience is the designers
Conclusion: the heart of the challenge is leadership and ‘change management’
The heart of the challenge in cultivating customer loyalty is one of leadership and change management. Specifically, giving up the existing ways of thinking about, organising and doing business.
This challenge is a difficult one at the best of times. It is especially difficult when the people who have to change are the people at the top of the organisation. Yet there is good news: Gerstner managed to bring about a transformation at IBM. It helped that he really had nothing to lose as IBM was a basket case and headed for oblivion!
It is important to communicate and set expectations correctly to avoid disappointment
Cheryl Hanna wrote an interesting post titled “The Art of Meeting Customer Expectations” in which stresses the need to clearly communicate and agree upon expectations between the organisation and the customer. She goes on to tell us how her non-tech savvy mother ended up buying a Blackberry because the sales person assured her that it was easy to use. It turns out that her mother does not find it easy to use and she is frustrated and unhappy.
I am in agreement with Cheryl on the need to set the right expectations up front. I have written about how the folks in Marketing and Sales are the source of most poor customer experiences: both of these functions tend to promise what the rest of the organisation is unable or unwilling to deliver. I have been the delivery person who has had to sit down with the customer and explain that despite what the sales person said it is simply not possible for me to provide the Sun and the Moon overnight and at that price.
Research suggests that customers have 4 distinct expectations
Where the story gets interesting is that Francis Buttle wrote the following in response to Cheryl’s post:
“I agree that it’s critical to understand expectations. The trouble is there are different levels of expectation. I published some research on this back in the early1990’s. The fieldwork showed that customers can think of expectation at 4 levels of abstraction, as follows.
1. Expectations of performance : “I expect to have my car serviced within 2 days of calling the workshop”
2. Desires: “I want my car serviced the day I call the workshop”
3. Experience-based norms: “Most people normally have to wait 3 days to have their car serviced”
4. Ideal standards: “My car should be serviced overnight and delivered to my home the next morning”
Competitive advantage is enjoyed by meeting ‘ideal standards’, but this can be extremely costly to deliver.”
Should we meet or exceed expectations?
Reading Francis’ comments I was reminded by the incessant conversation around whether one should meet or exceed customer expectations. On the one hand you have folks who are absolutely convinced that you have to exceed customer expectations and delight customers. On the other hand, there are folks who are adamant that exceeding customer expectations is simply flushing money down the toilet as it does not necessarily lead to customer loyalty and a return on investment.
In the real world only one expectation really matters
My personal experience suggests that the real world is a lot simpler than many of us make it out to be. Allow me to explain. Whilst Francis’ research may show 4 different types of expectations, I believe that the one that matters is the one that we are conditioned to expect – what Francis Buttle refers to as ‘experience based norms’. That is to say what I have been used to (personally) and what my social circle tells me that they are used to. That is the expectation that I am expecting you, the supplier, to meet. If you fail to meet this then I will be disappointed. If you exceed that expectation then I will be pleased.
In the real world you need to both meet and exceed customer expectations
The world is full of suppliers that are competing for my business. If you want to end up on my radar then you have to both meet and exceed my expectations. If you meet my expectations then I am likely to do business with you. If you exceed my expectations from time to time then you will stand out and thus help yourself to a bigger share of my spend on your category of product or service.
Allow me to illustrate this through an example.
How Diet and Fitness Resources has put itself firmly on my radar for fitness supplies
Recently, I wanted to buy a Swiss ball and so I searched for it on the Internet and found plenty of suppliers. So why did I end up buying it from Diet and Fitness Resources ? Quite simply because their website was the one that I found the easiest to read / make sense of, their price was competitive and I liked the fact that the delivery charges were clearly spelled out on the home page and were reasonable. Other suppliers made it hard for me to get hold of this information; one supplier had made me go through the purchasing process only to hit me with a delivery charge of £10 right at the end – a charge I was not willing to pay.
So I chose to do business with Diet and Fitness Resources because they were the first supplier that I came across which met my expectations around the website, the price and the delivery charge.
Once I had placed the order I got an email confirmation about my order. The email confirmation itself met my expectations as I am used to getting these confirmations when I buy stuff on the Internet. What exceeded my expectations – because I remember noticing this and being surprised – was the fact that the email came from a human being (Zoe Harris) rather than a faceless autoresponder.
The next surprise that I got was the second email which arrived within half an hour of the first email. This email was once again from Zoe and simply stated that the order had been dispatched. This took me by surprise because many suppliers do not send this kind of email and the ones that do tend to take between 1 – 3 days to dispatch the goods and send the email. Whilst I was surprised, I did not actually pay any attention because the Diet and Fitness Resources had set the expectation that I was likely to get the goods 2-3 days after placing the order. And that is exactly what I have been used to with other suppliers.
When the Swiss Ball arrived the next day, Diet and Fitness Resources were firmly established on my buying radar. Why? Because they had under-promised and over delivered. Put differently they had exceeded my expectations. And they have done so on the very first occasion that I have done business with them.
Three lessons around customer expectations
- If you the supplier meet my expectations then I will do business with you. However, if you want more than your fair share of my spend on your category of product then it really helps if you exceed my expectations occasionally. And a great moment to exceed my expectations is on the first order I place with you. Why? Because it is critical moment, it is where I am trusting you, and if you over deliver then you will stand out. That is simply how it is to be human.
- It is especially important that you exceed my expectations when I feel most vulnerable. I am most likely to feel vulnerable when I place my first order with you; when I have my first significant problem and need your help; when I am stressed; when I need you to be compassionate and bend the rules in order to take my situation into account and help me out.
- Whilst you the supplier can take action to shape my expectation the reality is that I already have my own expectations. They have probably been set by your competitors. And if you are selling goods over the Internet then it is likely that those expectations have been set by Amazon. So you have to match those expectations or hope that Amazon does not supply the products that you are selling. Alternatively, you have to be willing to offer a cheaper price to tempt me to buy from you.
The receptionist at my local physio clinic failed to deliver a P.L.E.A.S.A.N.T experience
Recently, I became a customer of a local physiotherapy and chiropractic clinic. At the first visit (the diagnostic) everything went well and I was delighted that my ‘consultant’ was able to see me the next day to work on me. I turned up on the day and walked into reception. The receptionist did not greet me – interesting that I noticed that. So I took a couple of steps forward and told the receptionist my name and that I had turned up for my 10:50 appointment.
The receptionist looked into her system and told me that the appointment was scheduled for 11:20. To which I replied “That’s odd, this appointment was made yesterday and it was for 10:50!” The receptionist (a young woman in her 20s) simply looked at her screen and replied that the appointment was for 11:20.
What got me was the attitude. It was an attitude of I don’t care, I am not interested in you or your issue. Furthermore, it came across that the computer system was right and I was wrong! I remember thinking how difficult is to say (genuinely): “I am sorry we messed up, does this change cause you a problem?” And then simply give me the space to air my concern or upset.
Here is simple checklist to help you deliver a P.L.E.A.S.A.N.T customer experience
Polite and courteous – are you using appropriate language to welcome your customers? Do you say hello, good morning, good afternoon, goodbye, thank you, what can I help you with today etc? Do you greet your regular customers by name? In my view this is a neglected area especially with younger members of staff – too many simply do not get the critical importance of politeness and courtesy in human to human encounters. In my case, the receptionist, did not greet me with even a simple “Good morning”.
Look and listen – do you look for opportunities to listen to customers? Do you give your customers undivided attention? Do you listen to what is unsaid as well as what is articulated in language? Do you pay attention to your customer’s body language? In my case, if the receptionist had listened to me she would have got that I was concerned about leaving my children on their own for an extra half an hour.
Eye contact – do you establish and maintain friendly eye contact leaving your customers feeling that you are interested in them and what they have to say? In my case, at the clinic, the receptionist spent more time looking at her computer then she did at me.
Appearance – do you appear approachable and friendly when faced with a customer in person or on the phone? Do your clothes make the kind of impact that the customer expects in your setting? Does the website/retail store make the right impression? How about the appearance of the location? In my encounter with the receptionist, I remember thinking “She belongs in a beauty salon or behind a perfume counter, not in a health clinic!”.
Smile – are you genuinely pleased to hear from / see your customers? Even if you are not, do you put on a smile (not a big fake grin) to make your customer feel welcome? In my case, the receptionist did not smile once, though my ‘consultant’ made up for this when she welcomed me with a genuine smile (at least it occurred as genuine).
Anticipate – do you care enough about your customers to anticipate and cater for their needs? I am talking about more than event driven marketing. For example, why is it that physio clinics provide uncomfortable seats in the reception area? Do these people not get that the reason most people come to them is because they have some kind of back problem? Or why do these clinics not go that one step further and anticipate that many customers would welcome access to videos that show them how to do the recommended exercises? The key to this step is to step out of the ME circle into the YOU (Customer) circle
Nurture – how well do you nurture the relationship with your customers? Are you eager to hear from your customers? Do you make it easy for them to contact you with suggestions, questions, complaints? Do you get back to them with what you have done to act on their suggestions, complaints, questions? How eager are you to actually serve your customers? Does this come across to your customers? Do you remember their birthdays? Do you say thank you by providing special recognition or offer? Do you ask for their help in improving / growing your business?
Truth and trust – are you truthful with your customers? Do you regularly and consistently build trust by delivering on your promises? Do you acknowledge your mistakes truthfully and set about clearly to make things right and rebuild trust? Do you give customers all the information that they need to make an informed decision? Do you publish the ‘bad reviews’ as well as the ‘good reviews’? Do you promise only what you can deliver?