Monthly Archives: November 2011
In the previous post I set out the importance of trust especially for services businesses like travel, insurance, banking, media, telecommunications. In this post I want to share with you the insights that come of the research that Prof. Chris Haliburton and Adine Poenaru carried out in 201o on the banking, insurance and mobile telecommunications industries – USA and UK.
What matters to customers?
According to the research customers are looking for service providers to level with them by providing high quality, clear, simple to understand communications that provide useful information that avoids unpleasant surprises and enriches the customers lives. Examples include: keeping policies simple and easy to understand; clear language in policy documents so that customers are not mislead; keep me up to date with all the changes that save customers money; making the pricing more straightforward – easier to understand; letting the customer know as and when there is unusual activity on the customer’s account etc. In my book, customers are asking for service providers to be honest with them – to act with integrity (in the moral sense).
Second, customers are also looking for service providers to make them feel that the company cares for them. Examples that show this kind of caring include: offering existing customers the same kind of deals that the companies offer new customers; putting customers before profits; doing what they said they would do; providing accurate truthful answers to questions; making customers feel valued etc. In my book this second dimension is showing benevolence through action rather than lofty mission statements and fine sounding values that are not put into practice.
Third, customers are a looking for courteous conduct and high level of competency from the front-line employees that interact with and serve them. The kind of things that customers want include: knows my policy inside out; sales people to be honest; dedicated account managers; all front-line staff trained to a high level and knowledgeable about and up-to-date with new plan; courteous and customer focused service etc. To my mind this need speaks to the rational dimension of trust: credibility, competence and reliability.
How you can cultivate trust: 10 lessons
What can you do to cultivate trust between your organisation and your customers? Prof. Chris Haliburton and Adine Poenaru make the following recommendations (paraphrased, added, amended by me):
Deliver the core service right. As previous experience + word of mouth + corporate reputation are the drivers of loyalty then it follows that you must deliver the core service right. Specifically, it means: meet (perfectly) the basic and core customer needs; actively search for, listen to and act on the voice of your customers (including social media); and manage your corporate reputation.
Get it right when it really matters. Find out what events and points in the customer journey matter most to customers and get these right. The literature refers to these as moments of truth. In the insurance field that is likely to include checking if you are covered, getting treatment pre-authorised, making a claim and getting reimbursed quickly.
Make customer feel that you are looking after them. A great way of doing this, as mentioned earlier, is to provide information, advice, product and offers that leaves them feeling enriched (better off). Another way is to provide customers with a choice of channels that they can use to get through to you. It also means having enough human beings on hand to deal with customer enquires as opposed to putting self-service technology between you and your customers and forcing them to use it. I had a horrible experience with the Santander IVR today and could not get through to a human being – I do not feel cared for at all.
Ensure your front-line staff embody high standards of competence and ethics (honesty, acting in the customers best interests).
Customise the customer experience. This means being a ‘sense and respond’ organisation rather than a ‘make customers fit into our standard policies and processees’. It is more than ‘treat different customers differently’ – it includes treating the same customer differently depending on the particular circumstances and emotional needs of the organisation.
Act the best of human: admit mistakes, apologise (genuinely) and fix them. Whilst compensation is OK it is not enough it falls short of what we expect from considerate human beings (and organisations) – this point is spelt out clearly by James Watson in one of his latest posts and I recommend that you read it.
Improve communications (from the customers perspective) across the board. Your communications need to bear in mind the needs (and interests) of your customers. In particular the communications must be speak the language of your customers, be relevant, be concise and above all they must not mislead. Customers will forgive you for making honest mistakes but they will not forgive you for deceiving them.
Look after your existing customers. This means providing existing customers with the same products, offers, service and attention that you bestow on courting new customers.
Provide simple easy to understand and clear contracts. Don’t catch your customers out with cleverly crafted contracts written in legalese that your customers will not read and cannot understand. Do the opposite write fair contracts, spell out the benefits and cons, don’t hide stuff in the small print, and above all write contracts in a language the customers can understand.
More transparency and integrity in pricing. The opposite of this practice is what the oil, gas and electricity companies do – ramp up prices as soon as wholesale prices go up but be glacial in cutting prices when wholesale prices go down. A great example of transparency and integrity in pricing was shared by Howard Shultz in his book Put Your Heart Into It – coffee prices tripled almost overnight and Starbucks did not put up prices because they had plenty of coffee in stock. Starbucks did increase prices eventually (when they had to buy coffee) and they kept these price increases to a minimum and took the time to educate customers why prices were going up. It may be the approach British Gas is taking right now to deal with customer concerns and anger over predatory pricing.
My take on this
Actually my take on the whole topic of trust and how to cultivate it is embedded in this post. Going further here are some of my thoughts:
Complexity takes a double toll on the customer. First, it is hard for the customer to find the right (the best) ‘product’ for himself. Second, it is that much more likely that the customer will be given inaccurate advice by the front-line staff. Why? Because as the ‘product range’ grows and the complexity of the ‘products’ for sale grows (functions, features, terms, conditions, exclusions, excesses etc) it is hard to ensure that the front-line staff actually understand the ‘product range’ and can provide accurate advice. Knowledgebases don’t help much. Why? How well would you perform if the customer was on the phone or right in front of you? Would you not feel the stress – the need to respond quickly? Yes, if you are a normal human you are likely to favour speed over accuracy – to reduce your stress and make your performance targets.
Poorly written communications including ‘product’ literature takes a toll both on the customer and on the front-line. If it is hard for the customer to understand, is ambiguous or deliberately confusing to the customer then it is likely that it will occur similarly to the front-line especially the people who are new to the job. That means that the front-line is that much more likely to misunderstand and provide inaccurate answers and advice to customers. It is also likely to mean that it takes that much longer to train the front-line staff to become competent.
Now that we have the competence dimension out of the way let’s deal with the ethical dimensions of integrity and benevolence. Is it really news to us, to anyone, that customers want us to be straight with them and treat them as if they matter? I suspect it is not. So the challenge is to live – embody – what we already know. Either the issue is that our society is full of dishonest, uncaring people or there is something about many organisations that turns honest, caring people into people who come across as being dishonest and uncaring. What do you think?
Thomas Cook – one of the big brand name UK based travel companies – has seen it share price drop by 85% to 10p and have now bounced back up to 30p. Why? The shares dived when investors lost confidence in Thomas Cook’s ability to survive. The shares recovered when Thomas Cook was given a lifeline of £100m. Competitor – Thomson – has made the most of this opportunity with its latest advertising: “You can smile with Thomson because you’re in safe hands. Another holiday company may be experiencing turbulence, but we’re in really great shape.” Clearly Thomson is seeking to undermine customer trust in Thomas Cook whilst building up confidence in itself. This got me thinking about the critical role that trust plays in the commercial relationships – in winning new customers (expanding market share) and retaining existing customers (customer loyalty) – especially in services businesses like travel, insurance, banking, telecommunications etc.
What do we know about trust and why it matters?
We, human beings, do not like to be faced with uncertainty, vulnerability or risk – these three factors take an emotional toll on us. We prefer to work on ‘autopilot, which is simply another way of saying that we prefer to trust and developed societies work on the foundations of trust. Just think if you were not able to trust anyone for anything: what would life be like? Here is what the literature says on trust:
Trust rests on three complimentary pillars: competence, integrity and benevolence
I am likely to trust you if you occur to me as being credible, honest and benevolent. Said differently: “Customer trust is based on the expectations that the service provider can be relied on to deliver its promises, to care for customer needs and demonstrate competence”.
Everything (all touchpoints) contribute to trust
The organisation (corporate reputation), the front line employees, marketing communications and self-service technologies all play a part in trust. Trust in the overall organisation (like Thomas Cook) is based on what customers hear and read about the organisation – that includes management polices and practices. Trust is also a function of the customer’s interactions with representatives of the organisation.
Trust has two dimensions: rational and emotional
Think of trust as a two sided coin, one side of trust is based on a rational process and the other side on an emotional process. Using the rational process the customer determines the service providers competence and reliability – its ability to keep the promises it makes to customers. Through the emotional process the customers comes to a conclusion about how much (or little) the company cares about customers and their needs. Customers look for indicators like responsiveness, flexibility, willingness to compromise and act beyond the profit motive. This is where being known as a company that values both social good and profit matters – it helps customers form that emotional bond quicker.
Here is my take on this: whilst both rational and emotional matter the emotional bonds matter more. Why? I don’t care how competent you are if I suspect that you do not care about me – that you are simply in it for the money. Given the choice I will look for someone who shows me that they care about me and are competent in their chosen profession.
Building trust takes time
Trust builds up through the accumulation of previous experiences (interactions) with the services provider. Experience is a lived phenomenon and customers can accumulate these experience by directly interacting with the service provider and by exposed to / tapping into word of mouth and corporate reputation. For the first time in history, I, the customer can determine how much to trust you simply by tapping into social media where your customers are already talking about you which is why sites like TripAdvisor are incredibly popular and influential. Last week I drove 60 minutes to see an optometrist when there is one within ten minutes of my home. Why? Because this chap came recommended through my personal network. I was not disappointed and I’d happily drive 60 minutes to see him again.
Trust takes the risk out – it acts as a safety net
Why did I turn to my personal network for a recommendation and then drive 60 minutes to see the recommended optometrist? Because my son’s wellbeing was at stake and I did not want to take any chances. This is what the literature says: “In situations of perceived risk or vulnerability, trust has the role of a safety net, helping the customer to make a decision by minimising uncertainty and risk. The insecurity about the long term horizon of delivery, as well as the inability to test the service before actual consumption makes trust a valuable decision factor for customers of service organisations.
I will set out what you can do to cultivate trust in Part II (coming soon).
The Post Office: the personal touch makes a huge difference
My son is an eager eBay trader and had a large bunch of parcels to post. Being an empathic human being (most of us are) I decided to help him out. I took eleven parcels and headed to the local post office – which just happens to reside in the back of the local grocery store. Truth be told I don’t particularly like going to this local post office because the grocery store is rather dull, the people behind the counter don’t greet anyone coming into the store and I have to navigate around people and shelves to get to the post office counter and inevitably there is queue. This time I timed it perfectly and there was no queue.
The woman behind the counter greeted me with a smile and we struck up a conversation – a plain old-fashioned conversation. I shared that I was helping out my son who loves business – buying, selling, dealing with customers, earning a fair reward for his risk taking and hard work. She went on to tell me that she knew my son, that he’s such a gentlemen, that he helps out at the local charity shop, that he is likely to be a millionaire. What really touched me was “You should be proud of him!” Our conversation took around fifteen minutes – it takes that long to ship eleven parcels. By the time I left the place we were both smiling and each of us wished the other well – genuinely. I am still smiling inside and out and I can clearly picture that woman in my mind and she has a place in my heart.
Lesson 1: never underestimate the power of the human touch to deliver a great customer experience and build goodwill between your customers and your organisation
McDonald’s: there is more to good design than making stuff look pretty
My ten year old daughter turned 11 this week and where did she want to go for her evening meal? McDonald’s. So that is where we headed and when we got there (around 7pm) it was almost empty. Whilst my daughter was ordering for the family I was busy taking in the look and feel of the ‘restaurant’. I got the green, healthy thing by looking at the furniture and the menus. I also noticed that the seating area was smaller as a young childrens play area had been put into one end of the store. Whilst I got that the place was in tune with ‘green, healthy, children, family’ mantra I could not help but notice that it felt cold.
With the food trays in our hands we headed to the seating area where the five of us could sit together – two on either side (on the wooden benches) and one to the side on a round stool. Getting seated was harder than you might imagine. I had to navigate around the round stool and slide onto the bench on one side of the table. It was not easy, I struggled – there was not enough room between the bench and the table! Then we found that we could not place our food trays on the table. Once I got past my frustration I realised that McDonald’s had reduced the width and the length of the tables. And reduced the distance between the tables and the wooden benches on either side. I did not enjoy the eating experience and was delighted when we left.
Lesson 2: there is a lot more to human-centred design than looks – you also have to make it easy for your customers to easily (and comfortably) do what they came to do
Radissan SAS: deliver the core services that your customer expects
Whilst I was doing some consulting work in Ireland I stayed at a Radissan SAS. The hotel was ideally placed for work – only twenty minutes walk from the client’s offices. The bedroom was clean and spacious. The hotel had free wi-fi, room service was prompt and the hotel staff were friendly and helpful whenever I approached them for some request. So why am I writing about them? What are the some of the key moments on the customer journey? Let me suggest a few: arrival and check in; getting a good nights sleep; breakfast and dinner; and checking-out. I noticed that each time I came to check in (it was in the late evening) there was no-one at the check-in desk and no instructions on how to get hold of someone. On several occasions there was no-one to ‘great me and seat me’ for breakfast and dinner. Yet, what ‘upset’ me the most was not being able to get a good nights sleep. Why? Because I found that the pillows did not work for me. I could not help thinking why the Radissan does not offer the option of different types of pillow.
Lesson 3: customers hire you to provide services, figure out what these services are (it is not that hard, really) and get them right including building in flexibility so that you can treat different customers differently.
Santander: be human and helpful
I rang up Santander to request a new chequebook and pretty quickly got through to a friendly chap. He was patient and friendly with me whilst I walked about the house finding all the stuff I needed to get through the security details. When I mentioned that I was not in a hurry but I might be driving up his AHT we told me to relax and take my time. And we talked about call-centres – he works in one and I help improve the way call-centres work to improve the customer experience. Once he had ordered the chequebook I was ready to say thank you and hang up. My friend on the other end was not finished. He had noticed that I had failed the IVR security check and so he asked me if I wanted him to send me over new security details that would allow me to navigate the IVR. He went further and told me how I could work the IVR in case of certain scenarios – information that I found useful. Most of all I really appreciated that he was helping me rather than selling stuff to me.
Lesson 4: put yourself in your customer’s shoes and provide information, advice and tools that help your customer – do this without being asked, sense the need/opportunity and resond appropriately.
PC World: don’t assume, check
I order the wrong PC fan from Amazon and did not have time to send it back and wait for a new one. The issue was not the fan but the connector. So I headed to the nearest PC World superstore and started to look for a converter – something that would allow me to convert a three pin into a four pin. I found something that looked like it might work. Wanting to make sure that it did work I headed to the service/repair desk and asked for help. The chap on the other side of the desk was cheerful and helpful. He categorically assured me that it would work so I opened the bag an tried fitting the converter onto the fan – it did not work.
The chap behind the desk got into action. He left his counter and went looking for other converters. He found one and told me that it should work – I opened the bag tested it out and it did not fit. The friendly chap recognised his mistake, took his time and found another converter. He was categorical: this will work – no doubt about it. I tested it out: it should have worked but it did not work the designs were compatible but bits of stuff got in the way and so the converter would not fit onto the fan cable. The friendly chap was not put off – he went to work and found another converted. This time he opened up the bag and tested it out with my fan. It worked! I thanked him – truly grateful for his help – and left the store. Next time I needed something I headed to that exact store and looked for that friendly chap.
Lesson 5: don’t assume, check – build a prototype, try it out, check what does and does not work, refine until it does work; and remember what should work in theory does not necessarily work in practice.
Lesson 6: if you want to cultivate gratitude and generate repeat business then focus on being totally committed to helping your customer get his needs met.
If you listen to the pundits then customer-centricity involves a complete transformation of your business
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. But is it that hard?
What lies at the heart of the customer-centric orientation?
Jonathan Field spelled that out last year in one of his blog posts:
“…..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.”
That is the philosophy behind customer-centricity. Don’t like the word philosophy then call it the guiding doctrine or the core guiding policy. But can you short circuit this process (avoid all the time, effort and cost in understanding your customers) and get there quicker? Yes you can, it is really easy to act now – today.
How to become customer-centric in one easy step
If you really want to become customer centric then simply give up self-serving category practices that exploit the customer rather than build goodwill with the customer. What do I mean? Allow me to give you example of self-serving, exploitative, industry practices:
- 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 customers to walk past tempting goods and thus make impulse purchases that they never intended to make when they first came in the store.
- financial services providers that deliberately make their plans/policies confusing using jargon that customers do not understand, putting in place all kinds of loopholes that they can use to avoid paying out and finally wrapping it all up in legal terminology that few of us will ever understand.
- utilities that deliberately make their tariff complex and are swift increase price because wholesale prices go up but then take their time lowering prices when wholesale prices drop.
- financial services providers that sell products that are worthless – the PPI scandal is a great example of an issue where the red flagged was raised back in 1998 and then it took another 13 years for the banks to concede but only when the courts ruled against them.
- software companies that make all kinds of wonderful sounding claims (business and technical) some of which are a stretch of the creative imagination and many of which will be hard to turn into reality.
- budget airlines force customers to ‘uncheck’ the insurance option twice. Why? Because it makes more money for the budget airlines.
You might think that I am picking on these industries. I am not. I am well aware that every industry has self-serving category practices (that are considered ‘business as usual’ by all the players in that industry) that at minimum make life hard for customers and at worst exploit the customers. So what does it take to give up these category practices? Nothing – really it takes nothing, you can stop right now. Yet, in practice it takes consumer watchdogs, regulatory bodies and often the courts. Let’s just take a look at the utilities industry as it is in the news.
British Gas says it will be simplifying tariffs
Ofgem – the gas and electricity regulatory in the UK – has recently been piling up the pressure on the industry players. After making more hushed noises Ofgem conducted a comprehensive review concluding that the energy companies are making excessive profits and that they have to change their ways starting with their tariffs – make them simpler to understand and compare. Well Ofgem came out and said this, the industry players did not like it one little bit and accused Ofgem of getting its facts wrong – or of misinterpreting the data. Looks like the Tops in British Gas have changed their minds.
I have been listening to Jeremy Paxman (“JP) interviewing Phil Bently (“PB”) the MD of British Gas and here are the highlights:
- “There are too many tariffs – 544 tariffs to choose from from six or so big energy players” – PB;
- “Consumer find it hard to compare tariff, chose tariffs and understand how to save money” – PB;
- “As an industry we should put our hands up and say we should be doing more to help” – PB;
- “We have not made it easy” – PB;
- JP shows a graph that compares the consumer bill against wholesale prices and asserts that whilst wholesale prices have gone down bills have not;
- PB makes the argument that wholesale prices are only one part of the cost base;
- “the whole point is simplifying tariffs, giving customers choice, giving them transparency..” – PB
If you want to listen to the interview or read the article click here.
My take on this
It is easy to become customer-centric by ditching self-serving category practices that exploit customers. Yet, it is not in the interest of the Tops nor of the system that they play in to do that. Why? Because it hits revenues and profits and the name of the game is to maximise revenues and profits by legal and sometime illegal means.
When industries are locked into certain structures it requires a powerful outsider to come in and disrupt the status quo. That outsider can be a regulator like Ofgem, it can also be another business that is not invested in the status quo. Apple comes to mind (music, phones), Virgin comes to mind, Salesforce.com comes to mind and so does Skype.
When Tops (and companies) who have been taking customers for a merry ride (and are only changing their ways because of the regulator) talk about transparency take this with a pinch of salt. Why? Read one of my earlier posts that deals with transparency.
The first step in changing your ways is to be honest and say it like it really is – think Domino’s Pizza and their admission about the quality of their pizzas and what they were going to do about that.
Being “authentic about your inauthenticity” is an essential step and yet few of us have the courage to take that step especially if you are one of the Tops – Gerald Ratner and his fate may be stopping many.
Customers are demanding greater product quality in tough times
In my last post I set out the key organisational attributes and barriers that organisations face in excelling at crafting and delivering a positive multichannel customer experience. But what do customers want? What matters most to customers? In Jodie Monger’s latest post she looks at the analysis performed on calls into call-centres (automotive, appliance, electronics indudstries) and points out that customers are demanding greater product quality in tough times. Specifically, she writes:
- Economic hardship is causing customers to seek to repair instead of replace products.
- There is a growing perception on the part of customers that things are no longer “made to last.”
What about efficient customer service and low prices?
I have been reading the Customer Experience Consumer Survey Report published by Econsultancy this month. Across five industries (Banking, Mobile Phones, Retail, Travel, Gaming) the attributest that matters most to consumers are:
- Efficient customer service
- Low priced products;
- High quality products.
Looking at these responses through the lens of my customer value formula this makes perfect sense. Efficient customer service increases value (for the customer) by reducing the effort involved in dealing with the company (buying, using, troubleshooting). Low priced products help the customer to make their budget stretch further. And high quality products increase the benefits received by the customer.
Let’s dig a little deeper to see what the variations were for some of the industries.
Banking – what matters to customers?
First of all I find it interesting that customers do not hold out the expectation that companies put their needs first. I interpret this as customers are living in the real world and they have a pretty good grasp of reality – most companies put their needs first and customers are used to that. However, that does not mean that you cannot differentiate yourself by putting your customers first. Remember that consumers were not asking for or expecting coloured computers – when Dell provided them their sales took off.
Second, customers are simply asking and expecting companies to get the basics right. Provide me with good value (product quality, price) and make it easy for me to do business with you – take the hassle out, save me time.
Third, the ‘fancy’ stuff that so many commentators focus on and which matters most to companies (joined up experience, consistent branding, relevant and timely communications) does not matter that much to customers.
Finally, never take consumer research at face value. Why? Because consumers are not that great at figuring out what really drives their purchasing decision and what really influences them. . If you were to ask consumers if advertising mattered and influenced them most would probably say no. Yet, advertising does influence hearts, minds and behaviour. If you spend time counselling people and you will be amazed at how little insight many of us have into our lives – what matters to us, what drives our behaviour.
What are your thoughts?