Monthly Archives: June 2011

What you are failing to do is much more important than what you are doing?

There are two kinds of errors that you can make: errors of commission and errors of omission.  An error of commission involves doing something that you should not have done.  A good example of this is the money that large companies invested in implementing complex CRM systems on the assumption that these would engender customer loyalty and drive revenues and profitability.  Closing down Napster and thus allowing the likes of BitTorrent to rise was an error of commission made by the music labels.  If you take a look at mergers & acquisitions you find that the research shows that these almost always destroy value and are not a good idea: the AOL and Time Warner merger is the one that sticks out for me.  If you look at this at a global level then the deregulation of the financial services industry was the big mistake that has brought the western economies to their knees.  Errors of commission are easy to spot in hindsight.

Errors of omission are the more important ones.  These errors occur when you fail to do something that you should have done.  Did Nokia indulge in an error of omission in sitting on smartphone technology (insiders tell me Nokia had this technology) and not introducing it and thus letting Apple steal the show?  Did the music industry make an error of omission in not setting up online music stores allowing customers to download individual songs? Did the offline book stores make an error of omission in not embracing the internet aggressively and thus allowing Amazon the premier seat at the table?

So where is this leading?  In the Customer field there is a whole bunch of stuff that companies should be doing right now and yet they are not doing it.  As such these companies are making errors of omission.  Allow me to give you some examples.

The words have changed yet the mindset is the same.  The mindset continues to be about finding clever ways of getting customers to do what we want and reducing costs.  The mindset has not shifted to a relentless focus on creating superior value for customers and figuring out how we get a fair reward for doing; time after time I hear something to the effect “How do we make more money out of our customer base or reduce the cost of servicing our customers?”  I rarely hear “How do we create more value for your customers?”.  Yes, it really does matter which comes first because what comes first determines the whole context for what happens.  It requires one kind of mind, one kind of organisation, to ‘extract’ value and grow this years financials.  It requires a fundamentally different mind and organisation to create value for customers, cultivate relationships and secure a lifetime income stream.

Effectiveness is doing the right things.  Efficiency is doing things right.  To cultivate long term relationships organisations have to focus on effectiveness: doing the right things as viewed from the customer perspective.  Yet the organisational focus continues to be on efficiency.  The relentless focus on efficiency means that I had to spend ten minutes or so hunting around for a telephone number to contact Sky.  It is also the reason that after four phone calls to BMI I was not able to pay my bill because my call was important to them yet they could not answer it even after five minutes.  It also means that human-human encounters are being replaced by human-technology interactions and so the opportunity to build emotional bonds is being sacrificed.  As a famous systems practitioner pointed out “The righter you do the wrong things the wronger you become!”

The organisational design is the same.  The functional organisational design and the associated management system was and is designed for a manufacturing centred organisation operating within a command and control operating system.  To be a customer centred organisation requires a fundamental change to the way that the organisation is designed.  It requires recognising that the front line people (those interacting with customers) are the most important actors in the organisation and the role of managers is to support these ‘actors’ in putting on the best performance they possibly can.  If you take segmentation seriously then it requires operational changes and not just sending some communications via email, others through SMS and the rest via direct mail.

I could go on and on and I am sure that if you put your thinking hats on then you can complete the list yourself.

Is your organisational focus on errors of commission?  Then who is looking out for errors of omission?  Please remember that the errors of commission rarely kill you.  Yet, errors of omission do exactly that even if it takes a little while for the results to show up.

If you are working on changing the customer experience then stop!

Recently I visited my brother to see how his car business is doing.  In the process we got talking and he shared a story that we can all benefit from.  It illustrates the folly of striving to improve performance of a complex system through piecemeal ‘change’.

By brother’s business partner bought a used car (which worked perfectly) and set about improving it.  He changed the wheels.  He changed the seats.  He added a body kit.  He had all kinds of work done on the engine. He had the exhaust replaced etc.  In total he had spent something like £17,000 on the car.  What did he get for it?  He had a car that no longer worked well.  Why?  Because he forget that a performance of car is emergent behaviour that arises as a result of the interdependence of the all the components.  That means you cannot simply change things piecemeal – like he did – if there are interdependencies between the pieces!

You may be looking to improve the customer experience or  to move your organisation from product focus to customer-centric.  In both cases I recommend that you take the road less travelled.  Start with what you want (your objective) and identify the constraints that any solution has to bear in mind.  Next study the ‘system’ at hand and figure out the key interdependencies.  Once you have sufficient understanding of the ‘system’ then go ahead and design.  Design is coming up with solutions and as such involves a blend of thinking: imagination, creativity, analytical and synthesis.  When you have the right design – rather like the architects blueprint – then you can start building to that specification knowing that all the pieces fit harmoniously.

You can choose to simply ‘fix what is broken’ in a piecemeal way. This is much easier and it appeals to those with an engineering mindset.  And it is natural because organisations are split into functions – each with its own agenda.  If you do go down this path then don’t be surprised if at the end of this series of changes you (your organisation, your customers) end up in the same place as my brothers business partner.

What you can learn from my Santander experience

I urgently needed to move money from one Santander account to another Santander account

Last week I needed to withdraw some money from my mortgage account and move it into my current account.  It should have been an easy process as I have done it many times.  Yet, I met a problem: I had forgotten my e-banking login details as I had not logged into my mortgage account for a couple of years.  As this was something I needed to do urgently – on that day – I rang Santander Customer Services.

Santander Customer Services didn’t provide the service

I got through to Customer Services pretty quickly and came face to face with the IVR.  Thankfully it was easy to grasp.  I selected the right option and pretty soon I was through to a female customer services agent who dived into the security check: date of birth, postcode, mortgage account no, monthly payments…… Once she had verified all that she needed to verify she asked me how she could help me.  I told her that she could help me by transferring money from my Santander mortgage account to my Santander current account.   I expected that she would say “No problem.”  She didn’t: she told me that I had to send in a letter requesting this transfer.

“How is it that I can and have made these transfers through e-banking and yet you cannot do this for me over the telephone?”  That was my question.  She told me that it was company policy.  She did not explain why it was company policy; I could have told her that company policy was stupid but didn’t after all she is simply an insignificant little cog in a huge machine who simply follows orders.

“Can you please put me through to someone who can help me recover my e-banking login ID so that I can make this transfer through e-banking?”  There was a pause along with a flat, emotionless, “Yes”.  I took that to mean yes I will do that but it is really not my job to help your figure this out.  Instead of being transferred to the right team she told me that I had to ring the e-commerce team and gave me their phone number.

IVR is the most hated customer touchpoint and I get to experience why that is

Well I rang the ‘e-commerce’ team no and was faced with the IVR.  I listened to this once, listened to it twice and then I listened to it a third time.  There were several options but not one that was relevant to my needs.  I tried to get out of the IVR and get through to human being and found that I could not: the same useless options ended up being relayed again and again!  Frustrated, I hung up.

Eventually I solve my service need through e-banking

I really needed to move that money so I dived into my banking file meticulously and eventually found my login ID.  It took me about 30 seconds to log in and then another 2 minutes to complete the transfer.  Thank the heavens for e-banking!  No wonder e-banking is so popular in the UK: it allows us to bypass the indifference and incompetence of the big UK banks.  Maybe I am being harsh.  The system has probably been deliberately designed this way so as to influence customers (like me) to self-serve through e-banking.

What you can learn from my experience

Companies don’t care about customers they care about competitors. The British banks act as an oligopoly doing business exactly the same way: each  delivers lousy customer service as it is not necessary to do better.  Customers know this and continue to stick with the bank they now bank with; I will continue banking with Santander.  The banks will only change their behaviour when a viable competitor enters who has no investment in the existing way of doing business.  If you look closely at other industries you will find that many of the companies embracing ‘customer experience’ are doing so because of the competition in their industry / marketplace.

If you want to improve the customer experience then start with company policies.   Company policies are like the rules of chess: change the rules and you change the game.  If you take a good hard look at your company policies you are likely to find that they are not customer friendly:  they are one of the biggest obstacles to designing and delivering attractive customer experiences.

Your customer facing staff should explain company policies in the right way.  If you are going to have policies that cause ‘pain’ for your customers than you have to train your staff to explain these policies in a way that makes sense to your customers.  What is the direct/indirect benefit to the customer of this policy?  This is something that you have to think through and explain to the customer.

IVRs can be a blessing or a curse.  Well designed IVRs are a blessing because your customers does not have to wait a long time to get to a human being.  And using human beings to route ‘calls’ is not the best way to use human beings.  However, too many IVRs are poorly designed from a customer viewpoint.  If you are putting in an IVR make sure that it is thoroughly tested before it is implemented to take account of all the scenarios. What mechanism do you have in place to figure out which IVRs are badly designed?

People have higher standards of people than technology.  Technology is either easy to use or it is not.  Technology works or it does not work.  Technology is not personal – it does not leave us feeling invalidated and offended.  We do not expect technology to ‘own and solve our problem’.  When it comes to people it is the opposite.  We recognise that people are human and they make mistakes:  we can and do forgive mistakes.  We do not tend to forgive people who are indifferent to us and our ‘pain’.  If people do not treat us the way that we expect people to treat us then we get upset.  And then we look for another supplier.

How to eat the customer experience elephant

Lior Arussy’s latest post got me thinking about organisational transformation.  How do you transform your organisation to make it deliver on the promises that you implicitly (‘brand’) and explicitly (‘value proposition’) make to your customers?  Does it have to be as hard and take as long as Lior suggests?  Before I deal with that question and suggest a way forward allow me to share some experience with you.

How do you transform an organisation?

Many years ago, before I switched to CRM, I used to design and set-up European shared services centres and in the process I learnt a lot about ‘transformation’.  Typically, this meant stripping out everything except marketing, sales and manufacturing from each country and put these functions/activities (customer services, logistics, finance, HR and IT) into a single European shared services centre.  When doing this we had two options: ‘big bang’ or ‘one bite at a time’.  We advised one bite at a time.  Even with ‘one bite at a time’ we found that it was easier to strip the functions/activities out of one country, move them into the shared services centre, deal with the issues and get everything humming perfectly before we moved on to the next country; moving one function out of 26 business units in Europe gave the illusion of ‘one bite at a time’ but was not – we had to learn that the hard way.

Transform the customer experience (and your organisation) one bite at any one time

So how do you eat the customer experience elephant?  My recommendation is to do it ‘one bite at any one time’.  But what kind of ‘one bite’ am I talking about?  Let’s ponder that question together.

The standard and most tempting ‘one bite at a time’ approach is segment your customers and then focus on improving the customer experience of one or more segments.  Does this remind you of the ‘strip one function out of each of the 26 operations and transfer into the shared services centre?’  The problem with this approach is that you will find all kinds of touchpoints are broken.  And that means fixing marketing, sales, customer services, your website/ecommerce operation, logistics, finance…….. That is not easy.  That is not the way to eat the customer experience elephant one bite at a time.

A much better approach is pick an objective and then focus on the one lever (interaction / touchpoint) that has the biggest impact.  For example bmibaby (low cost uk airline)  has increases revenues by £1m+ per annum in their top line.  How?  bmibaby articulated their objective: grow revenues through a better customer experience.  Their consultants identified that the key leverage point was all the customers who had ‘dropped’ their shopping baskets.  The solution was simply to send the ‘dropped basket’ information to customer service agents.  These agents rang up the people who had dropped their baskets and simply offered to help.  The result: between 25% and 45% of the dropped baskets were turned into revenue and the customer experience was improved.

Please remember that the customer experience across the customer journey is like a chain made of links. Some of these links (in the chain) are more important than others from a customer’s perspective: ‘moments of truth’.  Yet not all of these links are of equal importance nor are they all broken or equally broken.  The key is to study the system and work out which link is the weakest link from multiple perspectives.  If you fail to do that then that is like shoring up various holes in the dyke – possibly at great expense – but not the weakest hole.  The net impact is that the water flows through the weakest hole and all of your efforts at shoring up the other holes have been wasted.

Lets assume your objective is to GET more customers.  Then my question to you is “What is your weakest link?”  Put differently, “What is the one area of the customer experience that if acted upon will have the biggest impact in getting new customers?”  In bmibaby’s case it was to help new customer (predominantly) that were having trouble purchasing and had dropped their baskets.

Your objective may be to KEEP more of your customers – to reduce churn.  My question is the same “What is your weakest link?” Put differently “What is the ONE thing that drives your customers to leave you that if acted upon would have the most impact in helping you keep more of your customers?”

If you want to look at it purely from a customer’s perspective then the question is exactly the same: “What is the one thing that is having the most negative impact on your customers?”  Put differently “What aspect of your organisation is the weakest link from the customer’s perspective?”

The beauty of this approach is focus.  Focus allows you to concentrate all your resources and thus allow you to increases your chances of success and do it quicker.   It may be that to keep customers your most important leverage point is the product – improving the quality of it.  So you can focus all of your available resources on just that rather than dispersing them across marketing, sales, customer services, logistics, product enhancement….. Once you have improved the product quality you can study the system again and identify the new link that has become the weakest link and focus your efforts on that.

What do you think?

Why ‘sales gurus’ and CRM systems can’t increase your sales effectiveness

The other day I read another ‘sales guru’ offering his sales elixir and have written this post to debunk  these elixirs.

In the land of B2B selling there is real pain.  Whenever people are in pain they turn to the ‘gurus’ to give them answers.  And there are plenty of ‘gurus’ selling their particular elixir.  In the process companies have spent many millions on training, methodologies, negotiation skills and CRM systems.  Yet, the task of B2B selling has not become easier and the sales folks have not been raised to new heights of sales effectiveness.  Let’s take a deeper look at the issues and associated elixirs.

CRM systems make life harder for the folks at the sharp end

The theory and the rhetoric is that CRM systems make the people actually doing the selling more effective and efficient. The reality is almost the opposite: the sales folks spend time entering data into a system and get little value out of it.  The CRM system does not magically offer better customer insight (needs/wants), nor automatically select the right product/solution.  And it certainly has no influence on how well the sales folks interact with prospects: answering their questions, addressing their concerns, negotiating and closing the sale.  Most CRM systems end up diverting productive time into admin activities.  Allow me to elaborate a little.

The problem with most CRM systems is that it is quicker for me to get the details of my prospect from Outlook than the CRM system. And it is quicker for me to scribble down the details of any conversation on paper than it is easy to punch this into a CRM system.  What happens in practice?  I talk with a prospect and I scribble it down on paper – taking down notes in the course of the conversation.  Later I have to spend time entering these details into the CRM system.  What value does that add to me?

In theory CRM systems help in team based selling.  In practice, as a team member you cannot be sure that I have updated the system with the latest details and conversations.  It is highly likely I have not.    I will probably do it an hour or so before the weekly sales meeting to please the boss: the sales manager.  And if I have entered the details it is quite possible I have entered it against the wrong account; you’d be surprised how often the same account has been set-up but with different names!

Sales managers, not sales folks on the sharp end, have bought CRM systems.  Why?  Because they have promised and given the sales manager greater visibility and control over their sales folks.  This has come at a cost to the sales folks: time spent entering data and making things up to ‘please the boss’ or at least not get into trouble.  The CRM system has often became a master to be served and not a tool to help me sell.

Training – how much of it is useful?

No sales person should need ‘personal skills’ training.  If they do then you have recruited the wrong person and they will struggle because you are asking them to push a boulder uphill.

Every sales person has to understand the ‘product’ he is selling and I can totally get the value of practical, hands-on, immersive training that provides this understanding.

People that are new to selling can benefit greatly from sales skills training.  The issue that I have with most of the so-called ‘skills training’ is that it is ineffective.  Bombarding people with motivational stuff does not make them better sales people.  Bombarding them with lists of techniques does not make them better sales people – not by much.  The most effective way to build good sales people is to apprentice the new to the ‘masters’.  That way the ales stuff that really counts is absorbed – it becomes muscle memory.  Think about children they do not sit in a classroom learning the rules of grammar, the simply imbibe ‘best practice’ by experiencing it and practising it.

In theory negotiation skills training sounds great.  The reality is that the organisations that are busy sending their sales folks on this training have no negotiating power.  They are offering ‘me-too’ products/services and the guy on the other hand knows that.  Your negotiation strength rests on your ability and track record in walking away.  And that is the very thing that most sales folks will not do because any deal is better than no deal.  Why?  Because that is what the sales manager expects.

Processes and methodologies promise much and deliver little

Process fixation is great for a manufacturing where you are acting on matter which is always the same and which has no intelligence.  So repeating the same steps again and again – provided they are the right steps – gets you ‘zero defects’.  This is not the case when you are dealing with human beings who have ‘personalities’ and ‘intelligence’.  Each person is unique and the same can be said for ‘sales encounters’.  What counts is your ability to be flexible and adapt to this variety: one prospect might want you to get to the point whilst another may want to have more of a discussion and get to know you better before he buys from you.

Simple methodologies like SPIN selling tend be useful for people that are new to selling.  I found it useful back in my Andersen days when I moved from doing the consulting work to selling and leading the doing of consulting work.   My issue is with the more complex methodologies where you have to gather lots of intelligence, enter it into the CRM system and figure out what strategies you are going to use: are you going for full frontal assault or are you going to adopt a flanking strategy? What is forgotten is that in a competitive situation (RFP, pitch) your competitors are doing exactly the same.  So how do you figure out which strategies your competitors are going to use?

Let’s assume that you have no competition, it is just you and your prospect.  And let’s take a simple methodology SPIN selling.  SPIN tells you that you have to figure out the prospects Situation and his Problem/s.  Once you have that insight then you draw out the (negative, undesirable) implications of the prospect failing to take action.  And when you have your prospect there you can propose your solution.  Negotiation. Sale made!  Great theory but sucks in practice.  Why?

How do you get that insight?  The fact is that prospects are no longer open to talking with us sales folks.  Why should they?  They can find all the information they need and it is usually a few clicks on the mouse.  The sales gurus tell you that it is up to you to get this insight and then come up with a compelling proposal so that the prospect will see you.  But how do you do get the quality of insight you need to put such a compelling proposal together?  On that the sales gurus are silent or offer platitudes.   I put a proposal together and there is world of difference between version 1 and 2.  Why?  Because the person on the other side of the table opened up and told me all about his situation, pointed out the weaknesses of version 1 and described exactly what he is looking for in version 2.

My View

The key to sales effectiveness is insight.  Insight into the people you wish to do business with.  This insight has to be at two levels:  the person/s that you wish to sell to and their business situation.  What are they like people?  What do they want to achieve personally?  What is their business situation?  What are they seeking to achieve?  What are the problems/issues they are facing?

Process will not give this insight.  Methodologies will not give this insight.  CRM systems will not give this insight.  Sales training will not give this insight.

Only the person who you want to do business with or his inner circle can give you that insight.  So the key sales challenge is how do you get into that inner circle.   Many years ago Andersen arranged for one of the partners to live next to a CEO and frequent the same golf club.  It paid off.  In politics and in warfare extensive use is made of spies.  If you think of that creatively then it may offer some avenues like seminars, conferences, so called ‘independent’ research organisations…..

Sorry I cannot offer you a magic elixir. I am no sales guru just a student of life.

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