Category Archives: Case Studies
Does Customer Experience require information technology? Allow me to rephrase this question, is it necessary to purchase-configure-operate an arsenal of information technologies to improve the Customer Experience? Which is my way of asking, if it is necessary to turn Customer Experience as a business philosophy and/or value proposition into CRM: an information technology?
It occurs to me that it is mistake to collapse information technology and Customer Experience together – to make the kind of mistake that was made with CRM. I say that your organisation can impact-improve the Customer Experience in many ways that do not require information technology. Where is my proof? Let’s start with my recent experience.
Why Didn’t I Buy From Two Well Known Retail Brands?
I needed more trousers; my preference, some would call it addiction, is for Chinos. So my nephew drove me to a shopping centre outside of town. On his advice, I went to the first shop, found what I was looking for. And in the process I came across summer shorts. So with a handful of trousers and shorts I headed to the fitting rooms. Long queue. No movement for three minutes. No staff around to help out. I put the goods back on the racks and left.
Onwards to the second retail brand, which just happened to be next to the first store. Within five minutes or less, I found myself exiting this story empty handed. Why? One, they just didn’t stock trousers that fit me. Just about every trouser that caught my attention was regular length and regular is too short for me as I am tall and have long legs. Second, no staff members around to ask for help in finding longer length trousers. Third, the prices showed up as being too high; I remembered what I had paid for the Chinos I was wearing.
Why Did I Buy From The Gap Store?
Having had enough, I headed directly for the Gap store. Why? Because this is where I had purchased, some years ago, the Chinos I was wearing and happy with. The store showed up as friendlier-easier as it was much smaller in size, I could clearly see two sales assistants, and they looked happy. I spent over £150 pounds and walked out of the store with several Chino trousers and shorts. Why did I end up buying from Gap?
- They stocked the products that I was looking for – Chino trousers and a range of summer shorts;
- I found the particular style I was looking for – Classic;
- Each range of trousers came in a range of sizes including the size (34, 34) I was looking for;
- I found it easy-quick to try on the trousers (and shorts) as there was no queue for the fitting rooms; and
- The ‘checkout’ experience of paying for these items was quick-easy and delivered by a friendly sales assistant.
And there was a moment of delight. What delight? Upon checkout I found that I had been charged 30% less than I had expected to pay. Why so? Because Gap had a sales promotion that day and I had not noticed it as it had not been well signposted.
I draw your attention to this: no information technology was needed other than the POS till. Gap ended up the winner simply because it did the basics of clothes retailing right: store design (size-layout-signposting), the right product, ability to trial the product, good customer service, and pricing that is in tune with product quality and customer expectations.
I also notice, that I have a stronger bond to Gap and Gap did not have to engage in any customer loyalty or outbound marketing programme to generate that bond. How has this strengthening of the bond come about? By stocking the kind of products that I am looking for, by asking the kind of price I am willing to pay, and by making it easy-pleasant to buy from them: not just once, but every time I have bought from them.
If Gap does want to do something other than get the basics right then here is my advice. Gap should consider storing my preferences in terms of the products that I have bought from them. And allow me to order those products from them. Why do I say that? Whilst I like their latest Chino trousers (the ones I brought from them recently) I prefer the ones that I bought several years ago. The fact that those trousers are no longer available makes them that much more attractive to me. I wonder how many others are like me. If there are enough of us then there might be a market for listening to and catering to our needs. Back in the days when I was a consultant with Peppers & Rogers, we would put this idea into the mass customisation bucket. This is where information technology would be useful, even essential, for improving the Customer Experience.
I wish you a great week, thanks for listening – your listening calls forth my speaking. And if you have thoughts that which you wish to share then please engage in a conversation with me by commenting.
In amidst all the talk of the importance of a customer-centric culture, customer obsession, building customer relationships and improving the customer experience I find something missing. What? The commitment to tell the truth: being straight (levelling) with the customer. What I notice is that the ubiquitous business practice is to:
1) bullshit – make things up because they support the narrative/agenda irrespective of concern for truth-falsehood of assertions;
2) deceive by actively misrepresenting and/or omitting essential information; and
3) lie – to know the truth and assert the opposite.
So I find myself delighted to read that recently Honda has recalled ’1.8m cars around the world after a scare over an airbag in another manufacturer’s vehicle but made by its supplier Takata’. I’d like to believe that the folks in Honda are decent folks who put the lives of their customers before profits. And that may be wishful thinking. At the very minimum, it occurs to me that Honda has learned some lessons from Toyota and GM: when you find there is an issue, share what you know with your customers, and do the right thing.
Does it pay to do the right thing: to tell the truth? I share with you the following story (bolding is my work):
What many hospitals don’t consider is that a positive error culture could increase the trust of patients, as the following case shows. Matthias Rothmund, a professor of surgery, once made a big error. When one of his patients was checked a few days after a successful tumour operation, the x-ray showed a surgical clamp that had been mistakenly left inside the patient’s body. Rothmund immediately informed the patient, removed the clamp, and reported the incident to his insurance, which gave the patient a settlement.
For a long time the surgeon was plagued with the thought of his error. Five years later the patient returned to his office with a hernia and said he wanted him to perform the operation. Rothmund was surprised. The patient explained that he trusted Rothmund and his clinic precisely because Rothmund had immediately admitted his error and corrected it.
- Gerd Gigerenzer, Risk Savvy
Did you notice the trap that I set for you/us? Did you notice that the question that I asked is this one: ‘Does it pay to do the right thing: to tell the truth?’ If you formulate the question/challenge of right action in this manner then you show up and travel in the world in the manner of the Tops at GM. The folks at GM kept the knowledge of a faulty ignition switch secret for over a decade and in the process at least 13 people lost their lives. Why? Because by their calculations it didn’t pay (revenues, profits) to tell the truth, recall the cars, and fix the ignition switch.
What is my point? If you are genuinely committed to putting in place a customer culture then you do right by the customer, always, irrespective of how the ROI calculation works out. And whilst Mary Barra may lay the blame on the corporate culture, I say that the responsibility ALWAYS lies with the Tops.
I leave you with this final thought: Steve Jobs may have been able to bring about that which we he brought about because his actions were not dictated by ROI. What were his actions dictated by? Simplicity? Beauty – in its fullest, holistic, sense? The customer experience?
I say that there is a ‘price’ attached to everything and it is always paid. What is open to influence is ‘who’ pays the ‘price’. The question I wish to address in this conversation is this one: what is the price of customer loyalty and who pays it?
Let’s leave aside theory for those that specialise in it: the professors, the authors, the ‘gurus’. And look it this question in the concrete – through my lived experience. In particular, let’s look at two recent events and experiences.
Churchill: The Price of Customer Loyalty is a 70% Mark Up
Recently, I got a renewal reminder through from Churchill regarding the car insurance policy I have with this organisation. The price was was around £320. And I was assured that I was taken care of, needed to do nothing, was in safe hands and this insurance would be renewed automatically.
In the early part of my business life I got a good look inside the insurance industry. What struck me was how the folks in the insurance industry did everything in their power to not pay customer claims including legitimate claims. Where paying out could not be stopped, the focus was on delaying payment as long as possible (money in the bank earns interest for the insurance company) and making an effort to get the customer to agree to a smaller amount than the customer was due.
With this in mind, and a niggle at the back of my mind suggesting that the previous year the premium had been less than £200, I started my due diligence on the insurance comparison websites. Guess who showed up among the most competitive insurance providers? Churchill. Guess what the premium was? £187
Let’s take a good look at this from a loyalty perspective. The price of loyalty was to be paid by me as follows: increase in premium of £133 which amounts to a markup (on the £187) of 71%.
What did Churchill offer me in return for this extra premium? Nothing. The only difference between the £187 (on website) and the £320 (renewal) was that I got less cover! The £187 premium included free car breakdown insurance, the £320 premium did not.
What did I do? I took out a new policy for £187 and then rang to cancel the renewal. How did the call-centre agent respond? She asked me to allow her to match the best quote I had got elsewhere. I told her that Churchill had already done that. When I explained that I had taken out a new policy via the website she told me that it was normal for new customers to get a better deal especially if they sign-up online.
What else did she do? She told me off. For what? For taking out a new policy and messing up the internal system. What would she have liked me to do? Ring up Churchill, ask them to match the quote, get the renewal premium amended and continue with the existing policy. It occurs to me that Churchill is true outside-in organisation which understand the customer and focuses on the customer experience. How else does one come up with this radical approach to doing business? Joking! And sadly, the orientation is the default one despite all the talk.
Lesson for Customers: Never trust a commercial organisation to have your interests at heart. The standard practice is to sell you what makes most revenue-profit for the organisation this year.
Lesson for Enterprises: Given the radical transparency and ease of shopping facilitated by the internet it is necessary to pay attention to your pricing policies; not all customers are lazy, ignorant, or wealthy especially in the current economic climate.
RAC: The Price Of Customer Loyalty Is A 12% Mark Up
We received a renewal reminder from the RAC. Like Churchill, the RAC assured me that I was in safe hands, had to do nothing, the renewal would take place automatically. Given the comprehensive cover I have (UK, Europe, Number of People, Services) the sum of £342 did not seem too much. As I was doing the Churchill search on the net, I did the same for car breakdown cover.
I chose only to look at two organisations: RAC and the AA. RAC turned out to be just as competitive as the AA. Given my positive experiences with both organisations, I did not mind which ended up providing the cover. When I plugged in my cover requirements from the renewal reminder into the RAC website, I found the same cover for £322. No big difference.
Seeing myself as a Customer Experience investigator, I chose to call the RAC. I selected the ‘going elsewhere option’ on the IVR. The agent answered the call, I told him the situation. He has helpful and investigated. What renewal premium did he offer me? Better than I was looking at on the RAC website. He offered me a renewal premium of £307. I took up the offer.
So let’s do the maths. The price of customer loyalty is still paid by the customer. It is just that in the case of the RAC the price is much lower: £35 representing a mark up (on £307) of 12%.
Lesson for Customers: Not all enterprises are out to get you to pay every penny. Some like the RAC settle for charging you modest amounts (mark up) in exchange for the convenience of doing nothing – saving you time and effort.
Lesson for Enterprises: Charging modest premiums in exchange for convenience is likely to be better received-experienced by your customers; I view RAC rather differently to Churchill – the latter shows up for me as greedy, the RAC shows up as fundamentally ok. If you do get caught like the RAC did then consider being gracious and generous like the RAC agent. Why? Because, it left me with the experience of gratitude to RAC rather than the experience of getting satisfaction at besting greedy Churchill.
It occurs to me that companies have made a mess of customer loyalty as they have viewed this in a selfish (transactional) manner. They have viewed loyalty in terms of getting more money from customers. And by necessity the cost of customer loyalty falls on the customer: the customer pays to be loyal, stick with existing supplier.
So the opening for those who are up for a radical approach to doing business arises with grappling with this question: how can we create superior value for the customer such that s/he stays with us and is happy to pay a premium? It occurs to me that Apple has been doing a great job of answering this question through its hardware, software, and ecosystem. Which may explain why it’s value has rocketed over the last ten years. And why the market in used Apple hardware in eBay is more than all the other PC companies combined.