Category Archives: Customer Insight (inc VoC)
Why is it that I prefer not to business with a customer-centric business? Allow me to share my answer by referring to the UK grocery market. Which supermarket chain was applauded, by many, for its customer-centred way of doing business? Tesco. What was held responsible for fuelling this customer-centred way of doing business? The Tesco Club Card. Through this loyalty card, Tesco captured and made effective use of customer shopping data to grow revenues and optimise profits. In the process Tesco came from nowhere to became the world’s second largest retailer.
Where is Tesco today? Here is what The Economist said back in July 2014:
… on July 21st Tesco abruptly announced that Mr Clarke would be leaving his job, apparently prompted by a warning that profits in the first half of 2014 would come in “below expectations”. In June Tesco revealed a drop in same-store sales that Mr Clarke admitted was the retailer’s worst performance in 40 years….
Recession taught middle-class shoppers that discounters like Aldi and Lidl were cheap but not nasty; they spent some of the money they saved at higher-end grocers, such as Waitrose and Marks & Spencer……
Tesco is faring badly. Its sales dropped by nearly 2% in the year to June while those of its closest rivals, Asda (which is owned by Walmart) and Sainsbury’s, rose by 3% or better. Despite his exertions, Mr Clarke failed to persuade consumers that Tesco offers better value than the discounters or quality to match the upmarket merchants.
Is this as bad as it gets? No. Here is what the Guardian newspaper stated in on the 22nd of September this year:
Tesco has suspended the head of its UK business and called in independent accountants and lawyers to investigate after discovering that its guidance to the City overstated expected first-half profits by about £250m….
Tesco shares fell almost 8% on Monday morning to an 11-year low of 212p, making them the biggest faller in the FTSE 100 index and wiping £1.5bn off the retailer’s market value. More than £6bn has been wiped off share value since 21 July, when the previous chief executive, Phil Clark, was ousted.
Why is it that Tesco is in such deep trouble? I say that Tesco has arrived at where it is at due to its customer-centric way of doing business. What do I mean by this? I mean that the Tops got fixated into harnessing the data yielded by the Club Card to get customers to part with more of their money in Tesco stores.
Was this done by offering customers superior products as in higher quality products? No. The products were middle of the road yet ways were found of selling these at higher prices through clever marketing and merchandising.
Was this done by providing superior customer service in the stores? No. Tesco cut back on the number of people working in the stores so it was not unusual for the customer to find that there was nobody around to help when help was needed or find long queues at the checkout tills.
Was this done through a superior shopping experience? No. Management chose not to invest in the stores or the shopping experience in the stores. As a result the stores become less and less attractive over time.
I prefer not to do business with a customer-centric business because the management of such a business is more likely to be focussed on extracting value from their customer base through a variety of clever manoeuvres than earning its keep through superior products (Apple, Waitrose), superior service (John Lewis, Zappos), low prices (Lidl, Aldi), or a combination of service and low price (Amazon).
If you are a customer and your supplier is touting customer-obsession then you might want to think about whether that is a good thing. Is the obsession with providing you with a superior product, superior value, and/or experience? Or is it an obsession with with finding clever ways of getting you to buy more, pay more for what you buy, and get less in return? You might want to keep in mind that which many remind me of: business is not altruistic.
Recap: Where We Are At
If you took part in the previous conversation you will have a good grasp of the work context that led to the receptionists running to-fro from the front desks to the problem rooms, seeking to keep rooms in reserve so that they were in a position to placate angry customers by moving them to a different-better room, and using their newly acquired guest engagement skills to negotiate with customers – offering them refunds, room rate reductions and/or vouchers.
What Is The Core Challenge Here?
So I ask you what needs to happen for InterLodge to generate its desired outcomes: higher occupancy rates, higher price points per room, higher levels of customer satisfaction, and ultimately a higher share price? Let’s make this question simpler, what is the challenge here? Have a go, formulate an answer to that question.
Isn’t the challenge to shift the work context so that it calls forth, naturally and by default, the kind of behaviour that will result in guest rooms being fit for guests, leading to happy customers, leading to less rooms being kept aside by receptionists and no need for the receptionists to offer discounts-refunds on the room rates?
Now look further-deeper, go into the heart of the matter. Venture into territory that few venture into: think! Keep peeling the onion.
What is the core challenge when it comes to doing that which needs to be done in order to craft-deliver the kind of customer experience (end to end) that causes happy customers? Isn’t it cooperation? Cooperation between all the organisational actors who directly-indirectly influence the customer experience. Is it not your experience that the bigger the organisation, the higher the importance of cooperation, and the lower the likelihood of finding genuine cooperation?
What Steps Did InterLodge Take To Shift-Shape The Work Context?
According to the authors of the Six Simple Rules, InterLodge took the following three steps:
- Did away with the organisational elements that were useless and/or counterproductive. For example, they did away with the financial incentives which were supposed to motivate the receptionists to improve room occupancy. And they stopped the soft skills “guest engagement” training program.
Made managerial promotion dependent on having worked in multiple functions. Why? To encourage and ensure that managers had a lived-experiential understanding of the work of each function and how it related to the work of other functions.
Changed the work context so that cooperation was called forth between Housekeeping, Maintenance and the Front Desk (receptionists).
Let’s dive into point 3 shifting the work context to cause cooperation as the default behaviour. Imagine that is your challenge. What specific action/s would you take to shift the work context and call forth cooperation between Housekeeping, Maintenance, and the Front Desk (receptionists)?
What Actions Did InterLodge Take To Generate Cooperation Between The Multiple Actors?
Before I share the answer with you, I invite you to listen to the authors of Six Simple Rules:
Their [receptionists] work put them in the closest contact with customers, and they were the most directly penalised when customers were unhappy. They had an interest in cooperation but had not way to influence the behaviour of other groups – specifically, the housekeeping and maintenance staff.
So the clue is there: find a way to directly expose the housekeepers and maintenance staff to the wrath of unhappy customer/s. Did management pursue this option? No. Why? Because the did not find a practical way to expose these folks to the wrath of the customer. The customer was most likely to be angry in the evening when s/her checked into or returned to her room. And this is exactly when the housekeepers and maintenance were not at work.
What did InterLodge do? Management give the receptionists a say in the performance evaluation of the folks in housekeeping and maintenance. Did it work? Yes. Why? Because the Receptionists had a say and their say mattered. This is how the authors put it (bolding is my work):
In the past, it had always been enough for these employees [housekeeping, maintenance] to fulfill the criteria and meet the targets of their individual function. Now, people in the the two back office functions were also being evaluated on how effectively they cooperated with each other and with the receptionists, and it was the opinion of the receptionists themselves that carried special weight…. After all, their careers and the possibility of promotion were on the line.
Was it as simple as that. Not quite, this change had to work in conjunction with the other big change:
When this change in how personnel in back-office functions were evaluated was combined with the new cross-functional rotation of managers (which gave managers more of an appreciation for the interdependencies among the various functions), the nature of work changed rapidly at the hotel.
How exactly did the nature of the work change? By this expression the authors are pointing out, in particular, how the way the folks in housekeeping and maintenance ‘showed up and travelled’. Let’s listen once more to the authors:
The housekeepers checked the equipment in the rooms when they cleaned and let the maintenance groups know immediately when something needed attention. What’s more, the two back office functions were a lot more responsive when someone from reception would call asking for help to resolve a customer problem.
What Results Showed Up At InterLodge?
According to the authors:
… InterLodge hotel business unit’s gross margin increased by 20 percent within eighteen months. The rapid improvement in margins allowed the company to … nearly triple it [stock price] in just two years.
If you want to understand the logic behind this then I recommend buying-reading the Six Simple Rules.
What Is The Core Insight-Lesson For Those Working On Customer Experience And Customer-Centricity?
The core insight-lesson is spelt out rather pithily and it is one with which I am in full agreement. The lesson is so obvious and yet neglected. Why? Because it involves taking the “road less travelled”. What is this central insight-lesson:
To achieve customer-centricity make the organisation listen to those who listen to customers. Changing interaction patterns among functions is much more powerful than creating a dedicated customer-centricity function.
There you have it. The challenge of customer-centricity is that of disrupting, shifting, and shaping interaction patters so that transformed work context calls forth the requisite degree of co-operation from-across-amongst all organisational actors which directly and/or indirectly affect the customer experience. And the authors have shared how this was done at InterLodge. And they give other examples in their book, which is well worth reading.
Enough for today. In the next and last part of this conversation I will lay out for you (and comment upon) the sociological theory behind tools for shaping the work context. And why it is that the standard-commonplace approaches (hard, soft, hard+soft) to organisational change and customer-centricity do not work. Like they did not work for InterLodge.
Thanks for listening, I hope you got value out of the conversation.
This post got published before I intended to publish it. Sorry for this oversight. I have now completed it as intended and am republishing it. I apologise for any inconvenience and thank you for your understanding.
What do B2B technology vendors sell?
No, it is not the technology. Think again, what do B2B technology vendors sell? They sell dreams that speak to a fundamental human need. What dreams? Dreams of control-mastery-domination over the ever flowing, every morphing, character of a process we turn into a noun: life.
What need do these dreams take root from and speak to? The need for safety and security. At some fundamental level we get that nature is indifferent to our survival and wellbeing. To deal with this anxiety we embrace anything that provides the illusion of safety-security. The Greeks embraced the Gods, we embrace technology and the latest technofix.
I notice that the big data and analytics space is hot right now. It is the latest technofix being pushed by the B2B technology vendors. It occurs to me that this technofix is designed to speak to those running large enterprises – especially those who are higher up and divorced from the lived experience of daily operational life at the coal face.
What I find astonishing is that so few actually ask the following two questions:
1. “What kind of a being is a human being?”
2. “What kind of a culture is human culture?”
What is the defining characteristic of human beings?
Allow me to illustrate by share a story I read many years ago:
Psychologist: John, you have been referred to me by the authorities. They tell me that you think that are dead. Is that right? Are you dead?
John: Absolutely, I died a little while back. I am dead.
Psychologist: How interesting! You died a little back. Yet here you are talking with me. And I am not dead. So how is it that you are dead and I am not dead, yet here we are talking?
John: Beats me how this works or why it is happening. I know that I am dead.
Psychologist: John, I have an idea. Do dead people bleed?
John: Don’t be ridiculous! Everyone knows that dead people don’t bleed!
The psychologist suddenly reaches over and cuts John’s hand with a knife. Both of them are looking at John’s hand. Blood, dark red blood, is seeping through the cut. The psychologist looks at John with the look of satisfaction, of victory. Let’s rejoin the conversation.
Psychologist: John, do you see that blood on your hand? How do you make sense of it? You say that you are dead. And earlier you told me that dead people don’t bleed.
John: F**k me, dead people do bleed!
This is not simply an amusing story. It is a story that captures the experience of a respected psychologist who has been dealing with many kinds of people, dealing with many kinds of problems, over a lifetime. This story capture a fundamental truth of the human condition.
It appears that to survive in the world as it is and as we have made it, we need to be deluded. We need to distort reality: to make life more predictable, to make our current situation lighter-better than it is, to see a future brighter than is merited by the facts, to see ourselves stronger, more capable, more influential than we are. Studies suggest that those of us who lack this ability to distort reality and delude ourselves end up depressing ourselves.
What Kind Of A Culture Is Human Culture?
Symbolic and ideological. Why? Because human beings just don’t cope well with the world as it is. So we get together into tribes. And the glue that keeps the tribe together is a particular way of constructing the world, a particular way of giving meaning to the world, and a particular way of interacting with the world. And when I speak world I include human being, and human beings; a human being is always a being-in-the-world as in always and forever an intrinsic thread in that which we call world.
The next question: which ideology do members of society espouse? The dominant public ideology. In the world of business this is that of scientific management and in particular reasoning and making decisions objectively – irrespective of the past, of tradition, of our personal interests and opinions.
A more interesting question is that about the actual behaviour of the elites, the Tops. What is it that the Tops actually do? They do that which protects and furthers their interests: their power, their status, their privileges, their wealth, their dominance. So insight and recommendations (whether from big data and analytics or through conventional methods) that are in line with these interests are heartily accepted and actioned swiftly and vigorously.
Any insights and recommendations that challenge the vested interests of the elite (Tops) are repressed at the individual level, belittled-disputed-ignored at the societal level. I invite you to read this article which can be summed up as the UK Government sacks the chair of the official Advisory Council on the Misuse of Drugs. Why? Because the chair was insisting on the reclassification of drugs. What happened?
- The Advisory Council looked at the data (of harm to the individual taking the drugs and others affected by his/her behaviour) on drugs at the request of the UK.
On the basis of the data, the Advisory Council came up with the conclusion that “if drugs were classified on the basis of the harm they do, alcohol would be class A, alongside heroin and crack cocaine.”
The drug rankings, associated findings and recommendations were ignored by the UK government. Why? Because they went against the government’s stance on drugs.
The chair of the Advisory Council challenged the UK government’s refusal to act on the recommendations of the Advisory Council. So the appropriate UK Government minister sacked him.
What Does The Future Hold for Big Data & Analytics?
If past behaviour is an adequate guide to the future then it is safe to say that technology vendors will get rich. And the business folks will have another layer of technology that they have to manage. One or two organisations may reap substantial benefits, the rest will be disappointed. Yet, this disappointment will not last long. Why? By that time the technology folks will have come up with the latest technofix!
I leave you with the following thoughts:
1. There are no technofixes to the kinds of social issues-problems we continue to face;
2. Incremental improvements lie in the domain of big data and analytics;
3. Breakthroughs lie in our ability to see that which is with new eyes – a shift in dominant concepts, dominant paradigm, dominant ideology, dominant way of seeing that which is.
Put differently, big data & analytics is a red herring for those who aspire to lead: to cause-create that which does not exist today. Managers, those whose horizon extends to daily operations and the next twelve months, may find big data and analytics useful – as long as it does not threaten the sacred cows of the Tops-Middles and the corporate culture.