Category Archives: CRM
I get a letter
I got a letter through the post informing me that I was due for an eye test. Given that it has been several years since I had my eyes tested I welcomed the colourful reminder from Boots. I noticed that I could book an appointment online or by calling. At that moment I did not have a laptop handy so I chose to call. My call was picked up almost immediately and a helpful chap booked an appointment for me at the local Boots (Opticians) store.
How am I feeling? Happy. What kind of impression do I have of Boots? This is an organisation that has its act together: it has sent me a useful reminder, it has offered me several options, it has made it easy for me to book an appointment, and the fellow on the phone exuded human warmth.
I turn up at the store for an eye test
Several days later I turned up at the local Boots Opticians store. The store looks spacious and clean – I notice the whiteness of the store and I wonder if Boots is ‘stealing’ from the Apple retail stores. Walking up to the woman at the counter, I smile, I give my name and let her know I am there for an eye test. This is an opportunity for her to show up as a human being. She declines. In her best robotic voice, she tells me to take a seat.
Looking around the various stands housing the spectacles, I notice four seats in line. Two seats are occupied, two are free. As I approach the seats I notice that one of the seats is dirty – obviously dirty. The dirtiness of seat clashes with the sparkling whiteness of the store. And I notice that the seats (for customers) look crammed in comparison with the spaciousness of the rest of the store.
What does this tell me? It tells me that the star of the show at Boots Opticians is the product: the range of spectacles. How am I left feeling? Disappointed. Unwanted. What am I thinking? I wonder what the rest of the experience is going to be like.
The eye test happens
Shortly, and on time, a professional looking man comes out from the ‘back’ of the store, calls my name, and asks me to follow him. He shows me into a ‘tiny area’ which houses three machines. At one of the machines, a member of staff is testing a customer. I am handed over to a young woman. She proceeds to conduct an eye test. Whilst another member of staff takes my glasses to get those tested.
What am I thinking? I am asking myself how it is that there is so much space in the front for the spectacles and so little space at the back for conducting eye tests on customers. And I am asking myself if a lack of ‘human warmth’ goes with the opticians and/or the Boots brand. I am clear that for the staff, I show up as a ‘widget’ to be processed and not as a ‘flesh and blood’ human being.
Thankfully, the eye test does not take that long and the professional looking man is back. He asks me to follow him and walks me to a room that occurs as positively spacious-luxurious. Over the course of the next 10 – 20 minutes he proceeds to test my vision by inserting different lenses into the spectacles he has placed on my nose. His manner is professional. He shows up as knowing what he is doing.
At the end of the testing he tells me that my short-sightedness is slightly worse. And that I have started to become long-sighted too. He tells me that I can either have two pairs of spectacles – one for short sightedness and one for reading. Or I can go for one pair of spectacles that will cater for both needs. He suggests that I go for the single bifocal pair of spectacles. He then hands me over to another member of staff.
I walk out without buying spectacles
The new member of staff, a good looking lady with a smile, is keen to take me to the front of the store to pick spectacles. I decline. Instead I ask for my prescription, receive the prescription, make my way to the robotic lady on the counter, pay and leave.
Why did I not buy? I did not buy because I did not feel valued. I did not buy because it did not occur to me that I was consulted on my needs. I did not buy because it occurred to me that the focus of the staff in the store was to sell me spectacles. I did not buy because the people in the store and the experience lacked any semblance of humanity. Put plainly, I was looking for an ‘I-Thou’ relationship and what I got was an ‘I-It’ relationship – I was the ‘It’.
I look forward to the day, that an ‘Amazon’ like competitor puts the likes of Boots Opticians out of business.
Investments in CRM (including database marketing) are not likely to yield the desired results if the customer experience sucks! To generate ROI from CRM investments you have to pay attention to the customer experience.
Amidst the slavish devotion to customer experience and the ideology of customer-centricity I find Ryanair refreshing and instructive – including its recent change in stance towards how the organisation treats its customers. What can we learn from Ryanair and this change in stance?
Financial fortunes (not customer needs) shape management decisions
I find it instructive that trigger for this change of stance is due to a change in its financial fortunes:
- profits may miss or be at the lower end of its range of 570m euros to 600m euros (£480m to £508m);
- a dip in ticket prices and booking levels for September, October and November;
- the continued success of its competitor (Easyjet);
- shareholder concerns that customer service issues were hitting sales.
It occurs to me that what is refreshing about Ryanair’s management team is the refreshing honesty about what motivates-drives their actions. According to this article, Ryanair’s COO and deputy CEO ‘has dismissed the idea of “wholesale changes” at the carrier as it attempts to improve customer service’. Why is that? In the words of the COO
“Our model is to satisfy shareholders. There are other models to satisfy passengers.”
I say that a safe assumption, for any publicly listed company, is that the focus on the management team is no meeting the financial numbers. And any talk of customer-centricity has to be interpreting within this context.
The critical importance of the business model and how it shapes organisational actions
In order for there to be a viable business there has to be a viable business model. Using the business model canvas this means that the following business model elements have to fit together effectively: revenue streams, customer segments, customer relationships, distribution channels, value proposition, cost structure, key activities, key resources, and key partners.
If you take a deeper look at the business model canvas you cannot help but notice that right in the centre sits the Value Proposition. The organisation has to engage in specific activities to create the value proposition. These activities and the way they are carried out determine the cost structure of the business. Therefore, it is essential that the choice of customer segments, customer relationships, distribution channels and revenue streams deliver revenues that exceed the cost base and deliver a suitable return on investment.
It occurs to me that Ryanair’s COO understands the implication of the no frills airline model a lot better than the media which has been implying that the Ryanair management team have seen the light and will be making significant changes. This is what the Ryanair COO is reported as saying:
There is a balance and maybe we have gone too far one way. But the idea there is going to be wholesale changes is wrong.
We need to be better at communicating with customers, but that is no big deal.
When we take €70 from someone for having the wrong size bag we should do it with sympathy rather than glee.
Great advice for all businesses: don’t unnecessarily annoy your customers
I notice that Michael O’Leary (CEO, Ryanair) has woken up to the fact that it is not wise to unnecessarily annoy customers. He is reported as saying:
We should try to eliminate things that unnecessarily annoy customers.
It occurs to me that this does not go far enough. If you are in a management position where you have the power to shape organisational behaviour then I encourage you to end policies and practices that unnecessarily annoy:
- your customers;
- the people that work in your business and create value for your customers;
- your distribution partners;
- your suppliers.
Why? Because that which is unnecessary should not be done. Doing that which is unnecessary and annoys key stakeholders is stupid: self defeating in the longer term.
It does not pay to steal in the longer term
It occurs to me that it is worth bearing the long term in mind. Whilst it is possible to escape the consequences of your actions in the short term, this is rarely the case in the long term. In the long term your history catches up with you. When I was a child my father used to tell me stories to do with human nature. One story, I have remembered vividly, it’s moral was ‘If you steal expect to get caught, sooner or later. The only way not to get caught is not to steal.”
Looking at the Ryanair situation, it occurs to me that Ryanair has been stealing from its customers for many years and this is the year when Ryanair’s management has got caught. And so is having to do something about it.
What did Ryanair steal from its customers? The humanity that one human being expects and counts on another human being to deliver: human dignity.
In response to an earlier post (The Paradox At The Heart of Customer-Centric Business) Christopher Frawley commented:
Maz, your post is both intriguing and confusing. You’ve stated what you’re against, but I’m not sure that you’ve clearly articulated what you’re for. You do make the point about business being an ecosystem that’s larger than the customer and yes that’s true.
I would argue that the decisions you make about hiring, treating suppliers, revenue models, etc. are all in service to meeting and exceeding the needs of customers – the reason you have a business at all. All the questions about how the business operates should be answered through the lens of with what will help us do the best job for customers in the marketplace.
So many have awakened to the reality that more outward attention must be paid to the customer and you may consider much of what’s being said and done simplistic (as you stated). If a customer centric business does not center itself on its customers, then what if anything is at the center and/or what should it be? Thanks.
It occurs to me that Christopher makes good points and is asking questions worth asking. So the least that I can do is make the effort to grapple with his questions and share that which shows up for me.
I say that all of us talk a lot of nonsense and mostly we are not present that it is nonsense. Why? Because we fall in with the customs and fashions of the day. Whilst thoughts may show up for us, most of us rarely think. It occurs to me that a lot of nonsense has been talked about in the Customer domain by those who have something to sell to those who buy the nonsense.
Is business about meeting and exceeding the needs of customers?
Is it a God given commandment that the purpose of business is to meet-exceed the needs of customers? I haven’t seen it any of the holy books so it occurs to me the answer is no. Perhaps a better question, given that we worship at the altar of science, is to ask if meeting-exceeding the needs of customers is a scientific law. Can you and I agree that science has nothing to say on this matter, it is silent?
Which begs the question, who says that the reason you have a business at all is to meet-exceed the needs of customers? In grappling with this question, I ask you to consider that the taken for granted view (embedded in company law in USA, UK) is that the duty of management is to run the business so as to maximise the returns to shareholders. There is no mention of customers. There is no duty towards customers other than those duties imposed by consumer protection legislation. Do you not find it interesting that consumer legislations has been enacted to stop companies misleading even abusing customers?
Do entrepreneurs risk all so that they can meet-exceed customer expectations? I have had the privilege of working with some entrepreneurs. Based on that experience, it occurs to me that the answer is no. Some entrepreneurs start their businesses to escape the rat race. Others because they see an opportunity to make a lot of money. From what I have read, Steve Jobs did it to ‘make a dent in the universe’; Jeff Bezos did it because he did not want to regret missing out on the possibilities created by the internet; Tony Hsieh did it because he loved building businesses; Chris Zane did what he did because he found himself good at fixing bicycles….
Back to the central question and let’s ask this question differently. What is the basis of the assertion that the reason you have a business at all is to meet-exceed the needs of customers? The common answer is that it is the customer that pays the wages. Let’s take this to mean that without customers there is no viable business. Agreed. Now consider this question. What happens to a business if the people who work in the business all drop dead? What happens if the employees get together and go on strike? Is this business a viable business? I say no. If you think otherwise, then ask yourself why it is that USA and the UK governments and business establishment have sought to undermine unions and union power.
Let’s consider the energy companies in the UK. It is arguable whether they meet and exceed the needs of their customers. A fundamental need is for transparent pricing plans so that customers are in a position to make the right choices. The energy companies have done and continue to do all they can to stop customers getting this need met. These energy companies make huge profits by structuring the market to meet their needs – needs of top management and shareholders.
It occurs to me that business is as much about meeting-exceeding customer expectations as my life is about breathing, drinking and eating. Which is my way of saying that in the same way that it is simplistic to reduce my life to breathing-drinking-eating, it is simplistic to reduce business to meeting-exceeding customer expectations.
You may disagree. In that case can you and I agree that I have shared with you sufficient grounds to at least question the God given status of the truth of the assertion ‘business is about meeting-exceeding customer expectations’?
Should all business questions be answered on the basis of what will help us to do the best job for customers?
To answer this question, it is worth getting present to something: customers don’t exist. How to point this out more concretely? When i-you say “all business questions should be answered on the basis of what will help us to do the best job for customers” which customers are we talking about? Are we talking about the customers which are most profitable for us? The customers on which we are losing money? The customers where it occurs to us we have the most potential to grow their wallet share with us?
In ‘Onwards: How Starbuck’s Fought for It’s Life without Losing It’s Soul’ Howard Schultz draws attention to the real world – the world of messiness. Under the previous CEO, Starbucks had expanded rapidly to please Wall St. When an analysis of the stores was done there were 100s of stores that were simply not viable. So the decision was taken to close these stores. What happened when customers of these stores found out? Some customers wrote in asking-pleading for the stores to be kept open. Why? Because the Starbucks store played such a central role in their lives. What happened? Howard and the team listened, did the maths, and closed the stores.
When the folks at Apple were playing around with the technologies that would eventually constitute the iPhone were they doing so in order to meet-exceed customer expectations? Or was Steve vested in creating-building a phone that he enjoyed owning-using? I wasn’t there so I do not know the definitive answer. The writers (that I have read) say that Steve was concerned with creating a phone that he and his family-friends would enjoy owning-using. The effect of succeeding in creating such a phone was that of exceeding customer expectations. Yet, it was not customer expectations that drove the investment, effort, or passionate commitment to creating the iPhone.
Then there is Clayton Christensen and his theory of disruptive innovation. As I understand, Clayton Christensen makes the claim that successful companies become good even great at building a business around a highly profitable group of customers. And in the process they ignore other customers thus creating an opening for innovative disruptors. Consider Amazon, how is it that Amazon has become the giant of book retailing? I say it is in part because the incumbents were to busy answering question on the basis of their understanding, and investments, in doing the best job for customers who bought their books – the people who turned up, looked at and bought books in the store.
Can you and I agree that the game of business cannot be reduced to any simplistic formula. Including, ‘all business questions be answered on the basis of what will help us to do the best job for customers’?
What is my big issues with customer-centricity?
Life is messy. Life is full of polarities, contradictions, and paradoxes. Business is a realm of life and as such the game of business is messy, non-linear, full of polarities, contradictions and paradoxes. This is not a realm in which simple minded thinking, simple minded formulas, and simple minded approaches are effective. It occurs to me that too many of those working on customer focus, customer experience, and customer-centricity are falling into this simple minded trap.
Consider that the success of Amazon is as much on its ability to deliver the goods to the customer quickly as it is about its website. And that Amazon lives by the principle ‘the best service is no service’ – ensuring that everything works just right so that there is no need for the customer to contact customer services.
Consider that the success and value of Apple is tied to the ability of its people to come up with ‘magic products’. And Apple invests in on helping its customers make good use of these magic products. How many folks working on the customer experience even consider these two domains?
Consider that Ryanair has been hugely successful by enabling people who would not normally fly (as they could not afford flights on the likes of British Airways or Aer Lingus) to fly. It occurs to me that Ryanair is a great illustration of Clayton Christensen’s theory of disruption. By tapping this unmet need the folks at Ryanair have been getting away with treating their customers rather badly in terms of service, fairness, and charges.
Consider that Tesco was held out as the exemplar of taking a data driven, customer-centric approach to retailing. What is the case today? Tesco has been struggling since the recession whilst the likes of Waitrose, Sainsburys, and Aldi are doing rather well. So perhaps data driven retailing is not the magical formula for business success.
Consider that the John Lewis Partnership (John Lewis, Waitrose) have been growing from strength to strength – this is a business where the employees own the business and where their rights and obligations are enshrined in a legally binding constitution.
On LinkedIn, Don Peppers is sharing his perspective on making better decisions with data. This got me thinking and I want to share with you what showed up for me. Why listen to my speaking? I do have a scientific background (BSc Applied Physics). I qualified as a chartered accountant and was involved in producing all kinds of reports for managers and saw what they did or did not do with them. More recently, I was the head of a data mining and predictive analytics practice. Let’s start.
Data and data driven decision-making tools are not enough
Yes, there is a data deluge, and this deluge is becoming down faster and faster. Big enough and fast enough to be given the catchy name Big Data. What is forgotten is the effort that it takes to get this data fit for the purpose of modelling. This is no easy-cheap task. Yet, it can be done if you throw enough resources at it.
Yes, there are all kinds of tools for finding patterns in this data. And in the hands of the right people (statistically trained-minded, business savvy) these tools can be used to turn data into valuable (actionable) insight. This is not as easy as it sounds. Why? Because there is shortage of these statistically trained and minded people: amateurs will not do, experts are necessary to distinguish between gold and fools gold – given enough data you can find just about any pattern. It statistical savvy is not enough you have to couple it with business savvy. Nonetheless, let’s assume that we can overcome this constraint.
The real challenge in generating data driven decision-making in businesses is the cultural practices. We do not have the cultural practices that create the space for data driven decision-making to show up and flourish. A thinker much smarter-wiser than me has already shared his wisdom, I invite you to listen:
On the whole, scientific methods are at least as important as any other research: for it is upon the insight into the method that the scientific spirit depends: and if these methods are lost, then all the results of science could not prevent a renewed triumph of superstition and nonsense.
Clever people may learn as much as they wish of the results of science – still one will always notice in their conversation, and especially in their hypotheses, that they lack the scientific spirit; they do not have the distinctive mistrust of the aberrations of thought which through long training are deeply rooted in the soul of every scientific person. They are content to find any hypothesis at all concerning some matter; then they are all fire and for it and think that is enough …….. If something is unexplained, the grow hot over the first notion that comes into their heads and looks like an explanation ….
- Nietzsche (Human, All Too Human)
It occurs to me that the scientific method never took route in organisational life. Put aside the rationalist ideology and take a good look at what goes in business including how decisions are made. I say you will find that Nietzsche penetrating insight into the human condition as true today as when he spoke it. The practice of making decisions in every organisation that I have ever come in contact with is not scientific: it does not follow the scientific method. On the contrary, managers make decisions that are in alignment with their intuition, their prejudices, and their self-interest. It is so rare to come across a manager (and organisation) that makes decisions using the scientific method that when this does occur I am stopped in my tracks. It is the same kind of unexpectedness as seeing a female streaker running across the football pitch in a league match.
What are the challenges in putting data driven decision-making practices into place in organisations?
Technologists have a gift. What gift? The gift of not understanding, deeply enough, the being of human beings. Lacking this understanding they can and do (confidently) stand up and preach the virtues-benefits of technology. If life were that simple.
Truth shows up as attractive to those of us who do not have to face the consequences of truth. Data driven decision-making sounds great for those of us selling (making a living and hoping to get rich) data driven tools and services.
The challenge of putting in place data driven decision-making practices is that it disturbs the status quo. When you disturb the status quo you go up against the powerful who benefit from that status quo. Remember Socrates:
The very nature of what Socrates did made him a disruptive and subversive influence. He was teaching people to question everything, and he was exposing the ignorance of individuals in power and authority. He became much loved but also much hated …. In the end the authorities arrested him for …., and not believing in the gods of the city. He was tried and condemned to die …
- Bryan Magee, Professor
Beware of being successful in putting in place a culture of data driven decision making!
With sufficient commitment and investment you can put in place a data driven decision making culture. Like the folks at Tesco did. And by making decisions through harnessing the data on your customers, your stores, your products, you can outdo all of your competitors, grow like crazy and make bumper profits. Again, again, and again. Then the day of reckoning comes – when you come face to face with the flaws of making decisions solely on the basis of data.
Tesco is not doing so great. It has not been doing so great for several years – including issuing its first ever profits alert in 2012. What is the latest situation? Tesco has reported a 23.5% drop in profits in the first half of this year. What has Tesco been doing to deal with the situation? This is what the article says:
Last year, Tesco announced it would be spending £1bn on improving its stores in the UK, investing in shop upgrades, product ranges, more staff, as well as its online offering.
There are a number of flaws on data driven decision making. For one data driven decision making assumes that the future will be a continuation of the past. Which is rather like saying all the swans that we have come across are white, so we should plan for white swans. And then, one day you find that the black swan shows up! The recession and the shift in consumer behaviour that resulted from this recession was the black swan for Tesco.
Furthermore, I hazard a guess that in their adoration at the pulpit of data driven decision making the folks at Tesco forgot the dimensions that matter but were not fed into the data and the predictive models. What dimensions? Like the customer’s experience of shopping at Tesco stores: not enough staff, unhappy staff, stores looking more and more dated by the day, the quality of their products ……
It looks like the folks at Tesco did not heed the sage words of one of my idols:
Not everything that counts can be counted, and not everything that can be counted counts.
What Is The Achilles Heel of Strategy?
My colleague and I put our whole selves into our work talking with folks in the business, listening to customer conversations, reviewing research, looking at competitors and trends, looking at various approaches, evaluating these approaches and coming up with optimal course of action for our client and our client’s customers.
To our delight the strategy was accepted-approved by management. A month or so later we got busy on implementation planning. It was during the implementation planning when hard decisions had to be made that the commitment to the digital strategy unravelled. Our clients got the value of pursuing the digital strategy and they found themselves in a particular situation which called forth and drove a different set of choice and actions.
This is the Achilles Heel of strategy, every executive finds himself in a particular situation. And every situation has its own ‘logic’ and a momentum. As such it really it takes something to alter course and make any significant headway. It takes resolve – fierce resolve, the kind of resolve that grabs you and keeps hold of you. It is not the kind of resolve that is created through the intellect.
Why Don’t We Do What We Know We Should Do?
Have you wondered why your organisation sucks at being authentically customer-centric: practicing relationship marketing, client centred selling, pleasing customer service? Have you wondered why it is that your organisation sucks at calling forth the best from your people?
Now and then someone speaks and their speaking is wisdom. Today, I share with you the wisdom of David Maister as articulated in his great book ‘Strategy and the Fat Smoker‘:
“In business, strategic plans are also stuffed with familiar goals: build client relationships, act like team players, and provide fulfilling motivating careers. We want the benefits of these things. We know what to do, we know why we should do it, and we know how to do it. Yet most businesses and individuals don’t do what’s good for them….
The primary reason we do not work at behaviours which we know we need to improve is that the rewards … are in the future; the disruption, discomfort and discipline needed to get their are immediate…..
Our default pattern and why it doesn’t work
When it comes to improving performance at the individual, team or organisational level we tend to follow a self-defeating pattern. I have seen this pattern played out again and again over the last 10+ years as organisations have grappled with relationship marketing, CRM, customer experience, employee engagement, digital. Here’s what David Maister says:
We start self-improvement programs with good intentions, but if they don’t pay off immediately, or if a temptation to depart from the program arises, we abandon our efforts completely – until the next time we pretend to be on the program.
That’s our pattern. Try a little, succumb to temptation, and give up. Repeat until totally frustrated. Unfortunately, there is rarely, if ever, a benefit from dabbling or trying only a little. You can’t get half the benefits of a better marriage by cutting out half your affairs, cure half the problems of alcoholism by cutting out half the drinks or reduce the risks of lung cancer by cutting out half the cigarettes.
You can’t achieve competitive differentiation through things you do “reasonably well most of the time.” You not only cannot dabble, but you also cannot have short-term strategies ….. The pursuit of short-term goals is inherently anti-strategic and self-defeating.
You are either seriously on the program, really living what you have chosen, or you are wasting your time.
Why strategic analysis and listening to customers is not the answer
I worked in an organisation which expended considerably time-effort-cost in doing NPS quarterly. We had access to the voice of the customer. And the voice tended to speak the same tune quarter after quarter. Why? Because the people in the organisation were not willing to change behaviour in any significant way.
Is it possible that setting up VoC listening programs are a ruse? A way of saying to yourself and others that you are serious about improving the customer experience so that you hide your unwillingness to change your behaviour, the behaviour of your team, your organisation? What does David Maister say?
Improving the quality of the analysis is not where the problem lies. The necessary outcome of strategic planning is not analytical insight but resolve.
What are the essential questions of strategy?
If we know the why-what-how of employee engagement, meaningful customer relationships, and customer loyalty then what are the strategic question? Here’s what David Maister says:
The essential questions of strategy are these:
 Which of our habits are we really prepared to change, permanently and forever?
 Which lifestyle changes are we really prepared to make?
 What issues are we really ready to tackle?
Now that’s a different tone of conversation and discussion (and the reason that real debate is so often avoided).
What am I getting at here?
To come up with products that enrich the lives of customers requires resolve, analysis is insufficient. To create-deliver truly personalised-relevent marketing requires resolve, analysis and marketing technology are insufficient. To call forth the kind of service that generates gratitude from customers and makes them feel good about doing business with your organisation requires resolve, analysis-outsourcing-technology are insufficient. To orchestrate an end to end customer experience that calls forth customer loyalty requires formidable resolve, VoC and customer journey mapping are insufficient. Put different, dabbling won’t do; it occurs to me that most are merely dabbling.
I say, it is worth listening to David Maister once more:
There is no shame in aiming for competence if you are unwilling to pay the price for excellence. But don’t try to mislead clients, staff, colleagues or yourself with time-wasting, demoralising attempts to convince them that you are actually committed to pursuing the goal.
Relax, it’s ok to be just ok
As I get present to the world of business as it is and as it is not, I get present to the following and contradicts all the evangelising about customer focus, customer service, customer experience, customer relationships and customer-centricity:
1. Almost all businesses are unexceptional. They provide ok products (that do the job well enough). They provide OK digital real estate (websites, social media, apps, mobile). They provide OK stores. They hire OK people. They provide OK customer service – whether in stores or via the call-centres. And they generate an OK end to end customer experience, by default. As a result they do OK – they survive and make OK profits.
2. It is only against this background of OKness that the exceptional can and does show up. It is because almost all banks and insurance companies are ok that USAA glow so brig and htly. It is because most digital retailers are OK that Amazon shines brightly. It is because most high street retailers are OK that John Lewis and Waitrose (part of the John Lewis Partnership) shine brightly. It is because most organisations provide OK customer service that Zappos and Zane’s Cycles shine brightly.