Category Archives: Customer Loyalty
What Is The Access To Calling Forth The Best From Your People and Cultivating Authentic Customer Loyalty?
In the realm of business, first and foremost, I show up (for myself) and travel as a philosopher-strategist. One of the central concerns in philosophy used to be ethics: how to live well in this world with others. This has not been the case for quite some time and may account, to a large degree, to the way the world is and is not. One of the central pillars of strategy is focus: bringing to bear all your resources to the key leverage points at the right time/s.
Looking through the ethical and strategic lenses, I have been grappling with the question of performance and loyalty: what calls forth the best from the people who work in your business and what is he access to authentic customer loyalty? The kind without bribery, without the gimmicks. In my search I came across a wonderful book. Today, I wish to share with you certain passages that speak to me and may provide an answer to the question that I have posed here (bolding is my work):
When people work in conditions of perceived unfairness and unkindness, they fall into a self protective mode. Like turtles, they crawl into their shells and hide. They’re not motivated to take positive risks, to dig deep inside to discover all their talents and bring those talents to bear in creative ways on the challenges of the corporate business. Their emotions are tinged by fear and resentment, and these negative feelings block the flow of positive emotional energy the could be putting to work in their daily activities…..
… employees who feel honourably treated are most likely to pass on that honour and respect in their dealings with customers, potential customers, and vendors. Those who feel badly treated will quite often pass on some of that treatment as well to those outside the company with whom they have contact. And this can become a flash point for whether business is gained or retained. Most people find it difficult over the long run to buy even good products from bad or discourteous people.
Relationships Rule The World
In the course of my life so far, I have become totally loyal to any number of businesses ….. because I felt well treated in each of these places, welcomed, honoured, and respected. Friendliness, kindness, genuine concern, that little extra touch, going beyond the call of duty – these are all exemplifications of basic goodness, applications of the moral dimension that often bring with them the result of loyal relationships and greater business success…
Go ahead and develop a strategy, change the organisation structure, redesign processes, and implement the latest Customer Experience technologies. And it occurs to me that if you don’t talk about, grapple with, and address the questions of liberation and basic goodness as exemplified by friendliness, kindness, fairness and genuine concern for the people in your business (those who work ‘within’ it), the people served by your organisation (customers), and the people impacted by your organisation (community, vendors, partners..) then you are unlikely to ever build a solid foundation that allows you to call forth the greatness of your people and cultivate enduring authentic relationships with your customers.
I know that this is a BIG ask. Sit in on counselling sessions and you will learn that almost every single one of us resists acknowledging, understanding, and dealing with that which really matters. We will do just about anything and everything except that which really matters: how we show up and travel in the world and in particular who we relate to and treat our fellow human beings including those closest to us. And some folks do the difficult work and by so doing the live lives and make an impact in the lives of others that is uncommon.
I wish you a great day, thanks for listening. I welcome your thoughts, your experience on that which I have shared here today.
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.
Based on recent experiences I find myself moved to create a ‘Hall of Fame’. And a ‘Hall of Shame’ for well known brands based on how these businesses treat their customers. My commitment is to share the great practices of the ‘givers’ as well as the deceitful-manipulative practices of the ‘takers’.
Let’s start the ‘Hall of Fame’ with Waitrose. Why Waitrose? Yes, the stores are clean, spacious, well presented, well stocked. And our local store even has a cafe-restaurant and ample parking. Yes, the staff in the store are helpful. Yet, these are not the reason that I am choosing to place Waitrose, as the first entrant, into the ‘Hall of Fame’.
Recently, I found wife telling me that she was surprised about the quality of the tangerines: some of the tangerines were hard (too hard) and others were soft (too soft). Now, I found this interesting. Why? It was the way she talked about it. I think it fair to say she was shocked. What this suggest to me is that Waitrose, in her experience, delivers great quality products consistently.
Despite the relatively small price and the hassle involved, she decided to take them back. Why? This is not the kind of product quality she expects from Waitrose. And she was wondering how she would be treated.
Later that day, my wife couldn’t wait to tell me her experience. I was clear by the way she had a huge smile on her face that the experience was positive. What did she say? Something along these lines: “The staff at Waitrose were great. They apologised, I could tell they were also surprised and genuinely sorry about my experience. And they refunded twice the price. Not just the price of the tangerines, twice the price.”
Waitrose enters my ‘Hall of Fame’ because of the following:
Reputation for product quality – I cannot imagine my wife giving up half an hour of her time to take back a product that only cost her £3 to the likes of Tesco;
Great customer service – the staff in the store have always been friendly and helpful;
Design and condition of the stores – the Waitrose stores are clean, white, spacious, inviting, natural and for some even uplifting; and
An equitable-fair-collaborative-generous business philosophy – Waitrose lives-exhibits a philosophy of generosity and in so doing shows up as a ‘giver’. A ‘matcher’ would simply have refunded the purchase price. And a ‘taker’ would have put all kinds of hurdles in her way so that it was not worth her while even thinking of asking for a refund.
Most of all, Waitrose enters my ‘Hall of Fame’ because my wife told me she “can’t see herself not being a Waitrose customer”.
In the next post, I will kick-off the ‘Hall of Shame’ with anti-virus vendor BitDefender.