Monthly Archives: January 2013
In this post I continue the conversation I started in the previous post. To recap, this conversation is about transforming the Customer Services function. When I say transform I am pointing at something different to change. Take a good look at change and you will find that change often deals with changing the content rather than the context which gives rise to the context. Transformation deals with the context.
What does Customer Services really do?
Step outside of the content of handling calls, emails, or providing agents to respond to ‘click to chat’ requests and look at the Customer Service function. What do you see? I see the bigger picture. I see the powerful functions of Marketing, Sales, Ecommerce, Operations, Logistics, Finance creating ‘garbage’. This garbage lands in the lives of customers and the customers don’t like it.
Within the current context it is taken for granted that organisational functions will create garbage. Perhaps it is more accurate that this creation of garbage is hidden in the background and not even noticed. Marketing creates waste by misleading customers, or not providing them with the information that they need. Sales creates garbage by selling the wrong product or promising and not delivering. Operations creates garbage by making/sourcing products that don’t do what they are supposed to do. Or are difficult to setup and use. Logistics creates garbage by not delivering the products on time. Or not even providing a date when the product is going to be delivered. Finance creates garbage by getting the billing wrong or not explaining the charges adequately. The Ecommerce unit creates garbage by not designing the website so that it is both useful, usable and responsive.
This garbage lands in the lives of customers and the customers don’t like it. So they turn to the people in the business who can help with cleaning up this garbage: Customer Services. Put differently, within the current context the Customer Services function deals with/addresses/cleans up the garbage created by the rest of the organisation.
The access to transforming the Customer Services function is to focus on what is outside of the Customer Service function
It occurs to me that it is madness to focus on improving efficiency and reducing the cost of the Customer Services function. Why? Because that is simply finding more efficient ways of dealing with the garbage. If we use the manufacturing analogy then we have a whole bunch of people creating waste. This waste lands in the lap of the Customer Services folks to fix. The Customer Services folks are fixing it as best as they can whilst the rest of the organisation is hell bent on cutting their resources and expertise. Is this not insanity?
Surely, the lever for transforming the Customer Services function lies outside of the Customer Services function. Who is the cause of the garbage in customers’ lives that drives calls into the Customer Services function? Marketing, Sales, Operations, Logistics, Ecommerce, Legal, Finance etc. If these functions did not create the garbage in the first place then there would be a huge reduction in the call volume coming into Customer Services. And accordingly a huge reduction in the cost of the Customer Services function.
I say that the access to transforming the Customer Services function is eliminating the garbage that the rest of the organisation is creating in the lives of customers. Put differently, learn from manufacturing and build quality into the system so that the default functioning of the system is quality.
Which begs the question, how to do build quality into the system. I say you start by disturbing the complacency of the existing system. And a great place to start is to:
- Analyse the demand coming into Customer Services into ‘value demand’ and ‘failure demand’ where ‘failure demand’ is the demand falling onto Customer Services because of the garbage created in the lives of customers by the rest of the organisation;
- Code the ‘failure demand’ into buckets where the buckets represent the organisational functions (Marketing, Sales, Logistics…) that are the source of the ‘failure demand’; and
- Charge each of these organisational functions – on a monthly basis – 200% of the cost of dealing with the ‘failure demand’ generated by that functional silo.
Please note that for this to be effective, the charge has to be a real charge. It has to hurt by reducing the money that the organisational functions have to spend whilst being held accountable for meeting their objectives.
Why charge the organisational functions 200% of the cost. To get these organisational functions present to the hidden cost of creating garbage. When an organisation creates garbage in customers’ lives there are two costs. The first cost is the cost of cleaning up the garbage – the cost incurred by Customer Services. The second, hidden cost, is the damage done to the relationship and thus the lifetime value of the customer.
You might be wondering how this would transform the Customer Services function. Here is how I see it. If that which I am proposing was implemented rigorously it would disturb the system. The organisational functions feeling the most pain would be motivated to produce less garbage. And to do this they are likely to seek out the Customer Services folks to get a helping hand in better understanding the issues from the customer perspective. Together they would reduce the ‘failure demand’ falling on Customer Services and take the Customer Services function out of the business of ‘cleaning up the garbage’ thus freeing up capacity some of which could be used to focus on stuff that genuinely adds value to customers and leave them surprised and delighted.
Notice that within this context, Customer Services shows up as a valuable function. One that acts as an independent check on the health of the organisational functioning. And acts as a catalyst for keeping the various organisational actors ‘honest’ and ‘in sync’ with the needs/expectations of customers. Doesn’t that constitute a transformation?
Clearly for this transformation to occur it has to be led by the CEO and supported/enabled/enforced by the CFO. And their commitment or lack of commitment discloses all that one needs to know about the importance of the customer.
What is missing in most organisations? Genuine insight
Walk along the corridors of business for 25+ years, usually as an ‘outsider’, and you are likely to get that genuine insight is rare. I know this sounds outlandish and I say it again: contextual-deep-actionable insight is rare. Coming across such insight is like coming across gold on the streets of London or coming across genuine thought leadership in an ocean of content.
Yes, almost everyone has opinion. More accurately opinion has its tentacles into just about everyone in the organisation. Or is it prejudice based on one’s station in the organisation? Whether we call it opinion or prejudice, it is a clever fellow. Why? It disguises itself as fact – what is so, what is obvious to anyone smart enough to see it. Which people are the ones that are most gripped by opinion, prejudice, tradition masquerading as fact/truth? The people who are the most isolated from the world – the ones whose hands are not dirty in the doing of the work of the organisation. The people who do not: speak with customers, interact with customers, listen to customers, serve customers…
Yes, in largish organisations there are plenty of reports and documents. These documents tend to have lots of numbers and some of lots of graphs and other striking visuals. Almost always these documents assert authoritative sounding views on the world. I have looked at them closely and many times found them wanting. The trouble usually starts when I start asking questions like, “What is the basis of this number or assertion?” and start digging for answers.
No, genuine penetrating insight is about as common as an honest politician or genuine thought leadership in an ocean of content. What kind of insight am I talking about? Insight into customers and their lives. Insight into the way the organisation works and how it impacts the customer’s experience of the organisation. Insight into competitors. The kind of insight that one needs to develop strategies to improve the relevance – in the lives of customers – and performance of the organisation.
Using the Customer Services function as a source of insight
When I am looking to get a richer understanding of customers and the organisation where do I head to? I head to the Customer Services team which usually means the call-centre. What do I do there? Do I look at call-centre reports? Yes, but not straight away. Do I dive into the call-centre systems where call centre agents make notes and classify calls? Almost never. Why? The coding is ambiguous at best, downright misleading often. And the notes are written in a secret code – it is one way the call-centre agents make their targets, time to close the call targets.
Almost always I head to the call centre put on a headpiece and listen to calls. Why? Because I am listening to real flesh and blood customers. And by immersing myself in this listening I get access to rich insight. Insight into what?
Insight into customers. Their circumstances, their lives, their hopes, their concerns, their fears, their orientation/attitude/stance/affiliation towards the company, what they are hiring the companies products for. And, insight to their unmet needs.
Insight into the organisation itself and its impact on customers. I get access to: which products are failing which customers and how exactly they are failing; which automated touchpoints are not working and how exactly they are not working; which policies and practices are leaving customer frustrated, angry, or delighted; which functions – Marketing, Sales, Logistics etc – are the cause of pain or delight in customer lives; and what it is that these functions are doing, or not doing, that leaves customers angry, frustrated, disappointed, indifferent or delighted.
Insight into competitors. Customers interact with competitors and if you listen to what they are saying along with asking the right questions you can get access to what competitors are up to and how they are perceived by your customers.
Insight into the true level and nature of complaints. Most customer complaints never get recorded as complaints. When I listen into calls I get present to three aspects of complaints. First, the volume of complaints is much higher than what the official figures shows. Second, the causes of complaints are broader than what shows up in the official complaint logs. Three, the root causes of complaints are not necessarily the same as what would show up if I looked at the complaint logs and talked with the complaints team.
The title of this post suggests that I will disclose to you the secret to transforming the Customer Service function. And I have focussed on insight. What is going on here?
One access to transforming the Customer Service function is to turn it into a fee charging internal research agency / consultancy. A consultancy that provides valuable insight to various constituencies – Strategy, Marketing, Sales, Product Development, Operations – and charges market rates for these insights.
This is not the only access to transforming the Customer Services function. I will share the others with you in the follow up post – Part II of this series will be coming forth soon.
In this post I continue the conversation which I began with the last post.
Warning: don’t collapse ‘job to be done’ with customer needs
How did the philosopher Heidegger put it? Yes, he pointed out that you/I always approach that which shows up in our lives with an already existing horizon of understanding. Put simply, that means that our default way of being is such that we use our existing ‘frame of reference’ to make sense of the new. Which means that we will distort the new to fit into the old and thus squeeze all value out of the new. And I have noticed that some of you have collapsed ‘job to be done’ with ‘customer needs’. No, no, no. They are distinct even if they are related – think about the two sides of a coin. If you don’t get that now, you will by the end of his post provided you keep an open mind. Let’s listen to Clayton Christensen.
Milkshake: Cheaper? Chunkier? Chocolatier?
In his book How Will You Measure Your Life? Clayton Christensen writes that that a big restaurant chain wanted to increase sales of their milkshakes. So the company spent months studying this issue. It bought in customers who fit the profile of the milkshake consumer and asked them all sorts of questions. Questions like:
- Can you tell us what we need to do to improve our milkshakes so you would buy more of our milkshakes?
- Do you want them chocolatier? Cheaper? Chunkier?
Using this customer feedback the company worked and worked on making the milkshake better. The impact on sales? No impact on sales or profits whatsoever. I say you might want to really hear this and make a note of it before your rush out, gather feedback and get busy making changes.
One of Clayton Christensen’s colleagues looked at the situation and brought a completely difference perspective to the matter at hand. He asked the following question:
“I wonder what job arises in people’s lives that causes them to come to this restaurant to ‘hire’ a milkshake?”
This question opened up a new domain of enquiry. Clayton’s colleagues stood in a restaurant hours on end observing – paying careful attention to what was happening: “What time did people buy these milkshakes? What were they wearing? Were they alone? Did they buy other food with it? Did they eat it in the restaurant or drive off with it?”
What did they find? They found that nearly 50% of the milkshakes were bought in the early morning. And they were bought by adults who were almost always on their own. It was almost the only product they bought and almost all of them got in a car and drove off with their milkshake.
On another morning, as customer left with milkshake in hand, Clayton’s colleagues asked them questions designed to elicit the job that these customers were hiring the milkshake to do. What did they find? They found that these customers had a long boring ride to work. “They needed something to keep the commute interesting. They weren’t really hungry yet, but they knew that in a couple of hours, they’d face a midmorning stomach rumbling.”
What else did Clayton’s colleagues learn? They learnt that customers had hired bananas, doughnuts, bagels, candy bars. And the milkshake was the best product for the job. Why? “It took a long time to finish a thick milkshake with that thin straw. And it was substantial enough to ward off the looming midmorning hunger attack”.
Was this the end of the breakthrough insights? No. Clayton and his colleagues discovered that the same product – milkshake – was hired for a fundamentally different job. “Instead of commuters, the people who were coming in to buy milkshakes in the afternoon were typically fathers.…… I recognised that I had been one of those dads…. and I had the same job to do when in that situation. I’d been looking for something innocuous to which I could say “yes”, to make me feel like a kind and loving father.”
Who well did the milkshake do the job that the fathers hired it to do? Not well at all. Observations showed the children would take a long time to finish the thick milkshake through the thin straw. And after a while the fathers would become impatient to leave and so half the milkshake would be get thrown away.
What is the profound learning here?
I cannot do better than Clayton Christensen so let me share his words with you:
“If our fast food chain asked me, “So Clay…. how can we improve the milkshake so that you’ll buy more of them? Thicker? Sweeter? Bigger?” I wouldn’t know what to say, because I hire it for two fundamentally different jobs…. when they averaged up the responses ……demographic segment that has highest proclivity to buy milkshakes….. to develop a one-size-fits-none product that doesn’t do either job well.
On the other hand, if you understand that there are two different jobs that the milkshake is being hired to do, it becomes obvious how to improve the milkshake. The morning job needs a more viscous milkshake, which takes even longer to suck up. You might add in chunks of fruit – but not to make it healthy, because that’s not the reason it’s being hired…..And, finally, you’d wheel the dispensing machine out from behind the counter to the front, install a prepaid swipe-card so that commuters could run in, gas up and go……
The afternoon make-me-feel-good-about-being-a-parent job is fundamentally different. Maybe the afternoon milkshake could come in half sizes; be less thick……”
Words of wisdom
I wholeheartedly agree with Clayton Christensen’s words of wisdom:
“There is no one right answer for all circumstances. You have to start by understanding the job the customer is trying to have done.”
Being a physics graduate I value an insightful theory that opens up new domains of enquiry and provides access to breakthroughs in performance. Now and then I come across a business author who nails it, who provide such a theory. It occurs to me that Clayton Christensen nails the essence of the customer-centric approach to doing business. And it just happens to be at the core of my consulting work. Let’s start.
Do you have a deep understanding of what problems customers are trying to solve?
Let’s start with a truth that is so neglected. When I say neglected, I am not saying that you have not heard this truth. I am clear that many of you will have heard of it – most likely it is a platitude. And that is the very reason that this truth is not taken to heart, not lived, not given life in the world of business. What truth? This is what Clayton Christensen says in his marvellous book How Will You Measure Your Life?(bolding is my work):
“Many products fail because companies develop them from the wrong perspective. Companies focus too much on what they want to sell their customers, rather than what those customers really need. What’s missing is empathy: a deep understanding of what problems customers are trying to solve. The same is true of our relationships: we go into them thinking about what we want rather than what is important to the other person. Changing your perspective is a powerful way to deepen your relationships.”
Why does this passage speak to me? It is my experience. Time after time in my consulting work I am struck by the truth of this understanding. A lack of empathy and understanding for the customer as a human being who becomes a customer of the organisation in order to ‘hire’ that organisation – through its people and ‘products’ – to get a job that matters, done.
What can we learn from IKEA?
IKEA is an incredibly successful discount furniture retailer. It has been in business for over 40 years, it has global revenues in excess of 25 billion euros and Ingvar Kamprad (the owner) is one of the richest men in the world. The success of IKEA is not based on secret formulas, intellectual property, nor barriers to entry. So why is it that nobody has successfully copied IKEA? This is what Clayton Christensen says (bolding is my work):
IKEA’s entire business model – the shopping experience, the layout of the store, the design of the products and the way they are packaged – is very different from the standard furniture store. Most retailers are organised around a customer segment, or a type of product….
IKEA has taken a totally different approach. Rather than organising themselves around the characterisation of particular customers or products, IKEA is structured around a job that customers periodically need to get done.
The “job to be done” as a source of innovation, growth and competitive success?
Let’s continue listening to the wisdom of Clayton Christensen:
Through my research on innovation ….. my colleagues and I have developed a theory about this approach to marketing and product development, which we call the “job to be done”. The insight behind this way of thinking is that what causes us to buy a product or service is that we actually hire products to do jobs for us.
We don’t go through life conforming to particular demographic segments: nobody buys a product because he is an eighteen to thirty five year old white male getting a college degree. That may be correlated with a decision to buy this product instead of that one, but it doesn’t cause us to buy anything. Instead, periodically we find that some job has arisen in our lives that we need to do, and we then find some way to get it done. If a company has developed a product or service to do the job well, we buy, or “hire” it, to do the job.
The mechanism that causes us to buy a product is “I have a job I need to get done, and this is going to help me do it.“
So if you are going to segment your customers then segment them by the jobs that they “hire” you for. Here, I want to point out that you can use this “jobs to be done” approach for all customer touchpoints. For example, what jobs do your customers hire your call-centre for? What jobs do they hire your website for? What do they hire your facebook page for?
Back to what we can learn from IKEA?
Having set out his theory, Clayton Christensen returns to IKEA and explains the cause of its success as follows:
IKEA doesn’t focus on selling a particular type of furniture to any particular demographically defined group of consumers. Rather, it focuses on a job that many consumers confront quite often as they establish themselves and their families in new surroundings: I’ve got to get this place furnished tomorrow, because the next day I have to show up at work. Competitors can copy IKEA’s products. Competitors can even copy IKEA’s layout. But what nobody has done is copy the way IKEA has integrated its products and its layout.
This thoughtful combination allows shoppers to quickly get everything done at once….. In fact, because IKEA does the job so well, many of its customers have developed an intense loyalty to its products.
What is the lesson according to Clayton Christensen?
He sums it up well and find me in total agreement:
When a company understands the jobs that arise in people’s lives, and then develops products and the accompanying experiences required in purchasing and using the product to do the job perfectly, it causes customers to instinctively “pull” the product into their lives whenever the job arises. But when a company simply makes a product that other companies also can make – and is a product that can do lots of jobs but none of them well – it will find that customers are rarely loyal to one product versus another. They will switch in a heartbeat when an alternative goes on sale.
I will continue the conversation around the ‘jobs to be done’ approach of doing business and creating superior value – for the customers and your business – in the next post in this series.