I am no longer a fan of customer-centricity nor customer-centric business. I am not a fan of the way many are going about customer focus, customer-centricity, or customer obsession. It occurs to me that the approach taken by many towards arriving at customer focus, customer-centricity, and customer obsession is not gold, it is fools gold.
Why? Because it occurs to me that an organisation that shows up as customer-centric does not centre itself on its customers. At least not in the simplistic sense that is being written-talked about, promoted and acted upon by many.
I get that I make a bold, even controversial statement, and it highly unlikely to win me applause. That is OK, given that my commitment is to write my truth and take a skeptical stance towards the dominant ideologies and practices.
I get that you might want to better understand why it is that I assert that which I assert here. Allow me to point at, illustrate, and unconceal that which I am getting at here by sharing with you some quotes. Let’s start with Emmy Van Deurzen, chartered counselling psychologist and registered existential psychotherapist:
…. one can never ignore the needs of others when making personal decisions but neither can one allow others to entirely determine oneself even when alone. This is a paradox.
Yes, you do need to consider customers – their needs, their desired outcomes, their ‘jobs-to-be-done’, their preferences etc. And you cannot run a successful business just by focussing on your customers. The game of business involves other players whose needs have to be considered. For example, a facet of business life caught my attention whilst working with smaller businesses, which had not so gripped me for most of my life working in big businesses. What facet? The critical importance of finding, hiring, organising, enabling, inspiring, channeling, and retaining the people who actually work inside the business to do that which is necessary to create value for customers. It occurs to me that this is just as important for big businesses, it is not so evident because the dysfunctions of a demotivated workforce don’t show up as vividly in a huge organisation. Or take a look at Zappos, its success is partly built on the way the founders and management team treated suppliers (as a valuable part of Zappos) and thus called forth co-operation from them.
Furthermore, if you simply follow what customers are telling you then you leave yourself open to the disruption caused by those who can see beyond what customers are saying in market research and customer surveys. Here, I share a passage from Matt Watkinson, the author of The Ten Principles Behind Great Customer Experiences:
It is not only consumers who have shifted towards other-directedness and ended up struggling: businesses have too. The dominant obsession with market intelligence, competitor analysis, and customer research is all about developing a more powerful radar, and the endless hand-wringing and strategising over social media betrays the kind of anxieties that are most often found in those eager for the approval of others.
In contrast, we most admire those businesses with a strong inner direction – a clear set of values, integrity and sense of purpose – and tend to lionise celebrity CEOs who bring that ethos to life…….. Customers churn between suppliers to find the best deal, not because we are all extremely price sensitive, but because there is nothing to be loyal to.
What Matt is pointing at here is that we are not simply the kind of beings that economics says we are. Nor are we the kind of beings that rationalist philosophy, behavioural psychology, and scientific management assumes that we are. The human being is a richer human being. A human being that strives for meaning and connection, open to being loyal to ideals, values, missions that elevate human life.
Finally, I want to leave you with wisdom from John Kay, an British economist:
If you want to go in one direction, the best route may involve going in another. This is the concept of ‘obliquity’: paradoxical as it sounds, many goals are more likely to be achieved when pursued indirectly. Whether overcoming geographical obstacles, winning decisive battles or meeting sales targets, history shows that oblique approaches are the most successful, especially in difficult terrain.
Obliquity is necessary because we live in an world of uncertainty and complexity; the problems we encounter aren’t always clear – and we often can’t pinpoint what our goals are anyway; circumstances change; people change – and are infuriatingly hard to predict; and direct approaches are often arrogant and unimaginative.
So let me remind you of my central assertion:
A customer-centric organisation does not centre itself on its customers. It is a paradox. And I say that it occurs to me that the way that many organisations are going about customer focus and customer-centricity, will not get them there. The path heavily promoted, and commonly taken, is fools gold.
Whilst I abhor combat, I do welcome conflict: conflict is simply the showing up of difference. And if difference is approached through the spirit of dialogue then it unconceals aspects of the world that are hidden from each of us. So if you disagree with that which I have written then please speak your mind, educate me, share that which you see and which I do not see. I wish you a great day and thank you for making the time to listen to my speaking.
What is the cost of putting profits before customer interests?
This week one of the UK’s largest insurance brokers got hit with a £7.4m fine. Why? This is what Tracey McDermott, the FCA’s director of enforcement and financial crime, is reported to have said:
Swinton failed its customers. When selling monthly add-on policies, Swinton did not place the consumer at the heart of its business. Instead it prioritised profit.
At the FCA we have been clear in our expectation that firms must behave in the interests of consumers. Today’s outcome shows our approach in action and will act as a deterrent for other firms tempted to put profit figures above the fair treatment of customers.
The Dark Side of Customer Experience
Is Swinton the only organisation where people in the business put revenue and profits ahead of treating
customers fairly?Not according to Monique Reece:
The dark side of customer experience is the way in which some companies take advantage of their most loyalcustomers. For example, if you are a loyal cable subscriber, you may very well be paying more for your service than a new customer who just got a deal for switching carriers. Or if you are a magazine subscriber, you might asked to renew your subscription at a much higher price than if you just let the subscription lapse and subscribed as a new customer.
Dark patterns: carefully crafted user interfaces that trick users
Is the limit of the dark arts that companies use to fleece customers? Here’s what Michael Hinshaw says in a recent post of his:
According to darkpatterns.org, a dark pattern is “a type of user interface that has been carefully crafted to trick users into doing things.” Put another way, firms that employ dark patterns trick their customers into buying/signing up for things they almost certainly don’t want.
It can be as egregious as getting rental car customers to buy insurance they don’t want or need, or signing up for recurring shipments, billed monthly, when all they want is a single purchase…..You get the drift. Dark patterns get customers to do things they wouldn’t typically choose to do, if they were presented the options in a straightforward manner.
What does Michael Hinshaw recommend? He recommends finding the source of these “bad profits” and taking the necessary action:
So, ask yourself: does your company ever try to “trick” your customers? If the answer is yes, put up your hand and “out” the practice, pushing your firm to do something, well, better. There’s always an alternative to using dark patterns.
Is customer focus the antidote to these dark practices?
Time and again I have called attention to the ‘extraction’ context that lies hidden underneath the content of customer relationships, CRM, customer focus, customer experience, and customer-centricity. And it has occurred to me that I have been a lone voice spoiling the customer love fest. Not anymore.
I share with you selected passages from Bruce Kasanoff’s latest post which shows up for me as being the best post I have ever read when it comes to customer focus and/or customer-centric business:
The vast majority of “customer-focused” initiatives reek of a taker mindset.…. They do not think of customers’ interests first. They do not give major new benefits or services to customers. They seek to take more money out of people’s wallets.
In short, these initiatives were designed by takers, and if you are a giver it is enormously frustrating to deal with the hypocrisy that surrounds you: your company says it wants to help customers, but its policies and procedures are designed to take from customers, not give to them.
The taking mentality creates systems that make it so hard for customers to stand up for themselves that it’s easy for companies to “legally” lie, cheat and steal from them.
Putting takers in charge of customer experience is like asking a bear to guard your honey.
If you really, truly want to grow your company faster than your competitors, hire, promote and empower givers.
Givers are people who think of other people before they think of themselves. They are the people who should be designing and running customer-focused initiatives. They are the folks who have the vision and ability to grow revenues, because they are focused on the needs of others.
As I have said before, an authentic shift towards customer-centric business requires a genuine shift in consciousness. A shift from a “You OR Me” context to a “You AND Me” context. A shift from shareholder capitalism to conscious (stakeholder) capitalism. A shift from maximising short-term profits (at the expense of people and planets) to maximising long term wellbeing for all. A shift from calculating mind towards a generous heart. A shift from taking-keeping-excluding to giving-sharing-including.
What do you say?
Is Richard Bove on to something?
When an anomaly comes along and/or someone questions that which is taken for granted by a community we can either ignore it or we can dive into it, grapple with it, and see what we can learn. This piece by the New York Times about the poor service Richard X. Bove experienced at a Wells Fargo branch caught my attention. And in particular the following statement
“I’m struck by the fact that the service is so bad, and yet the company is so good,” said Mr. Bove, an analyst with Rochdale Securities. “Whatever it is that drives people to do business with a given bank, in my mind, now has to be rethought.
Lets be clear on this. Richard Bove has come across unhelpful bank tellers, unexplained monthly fees and fumbled mortgage application. On the other hand, as a securities analyst, he observes that the bank is doing well financially. And on that basis he questions the value of banks being good to their customers as opposed to pushing products and managing risk.
I say great, we should keep an open mind and question the taken for granted. Further, I say that there is no simple relationship between customer service/customer focus and financial performance. What mattered yesterday might not matter today or tomorrow. What did not matter might be critical in the future. In any competitive industry, one has to be mindful of competitors and consumer needs/behaviours.
Is it really possible to treat your customers badly and do well financially?
Why might it be possible for a bank to do well financially despite lacking the customer orientation and not delivering good customer service? The simple answer is that customers keep doing business with the bank – they keep accepting poor service from the tellers, accept/don’t notice unexplained monthly charges and put up with fumbled mortgage applications. So the question becomes: why do customers stick with their existing banks and not move to other banks?
It is fashionable to peddle the view that many customers will take their business elsewhere if their existing supplier treats them badly. I am not convinced that this is actually the case for the majority of customers. I say that customer surveys get access to what customers would like to do (switch after a poor experience) as opposed to accessing what customers actually do. Why the difference? We stick with what is convenient and we accept what works well enough. Furthermore, we get used to being lied to, being hit with unexplained charges, difficult to use/irritating IVRs, company staff that are clueless ….. And we learn to cope. For example, we use online banking as opposed to going to the branches.
My experience, UK experience, suggests that many if not most customers are firmly convinced that one bank is pretty much like any other bank. Furthermore, they are convinced that it is a difficult, time consuming, chore to move banks. Lastly, they are convinced that the process will go wrong and then they will have to expend more time trying to get hold of unhelpful banks and companies to fix what is gone wrong. Given this, it is no surprise (to me) that banks have some of the highest ‘customer loyalty’ levels around. I wonder if some of this also applies to the USA.
At this point you are most likely to be thinking that I am in agreement with Richard Bove: that treating customers right simply doesn’t matter and banks should focus on pushing products and managing risk. Not quite. To get a rounded perspective we have to deal with competition and time. Let’s start with competition.
Lets consider the impact of time and competition
Where each player in the industry works to the same theory of business and thus goes about business the same way customers really have no choice. However, when a new entrant comes along and does things differently then the opportunity for disruption occurs. Think Amazon. Hasn’t Amazon fundamentally changed the book buying and reading experience and in doing so attracted and retained hordes of book readers. Has it not thrown the incumbents to the wolves? Think Apple: how many sleepy/cosy industries has Apple disrupted?
So my key point is that as and when a new entrant shows up in the banking industry and offers a superior value proposition centred on honesty, convenience and customer service in the banking industry it will be interesting to see what happens. In the UK I am watching the progress of Metro Bank with interest. Also, it will also be interesting to see if Richard Branson and the Virgin Group do anything interesting given that they are looking to buy branches from the existing banks.
Time matters. The best way for me to make this real is to share the example of Tesco. For ten years or so Tesco did extremely well financially, it was the company to beat in food retailing in the UK. That is no longer the case as this piece shows. What happened? In the UK Tesco failed to invest in the customer experience. Specifically, Tesco failed to invest in the stores and in the people that served customers. Over time the customer experience became poorer and competitors caught up. Then the recession arrived, customers went to competitors, Tesco lost market share, issued a shock profit warning and the value of the company dropped by £5 billion.
Yet, to get that time matters we do not have to go beyond the financial services industry. Look the banks made a fortune over the last 30 years. More and more deregulation delivered more and more revenues and profits. Then the financial services industry as a whole went bust. Yes, bust. Time caught up with financial services industry – it just took 30 years for the consequences to catch up with behaviour. And we, through our governments, have socialised the losses. It is only because the citizens/taxpayers have taken the hit, a big hit, that the banks continue.
Wells Fargo may be doing well today because it is reaping the fruits of yesterday and/or sacrificing the future. Yes, you can always boost short term revenues and profits by milking lazy, confused, gullible and helpless customers. Put differently, the only way we can know if Wells Fargo can get away with poor service by bank tellers, unexplained monthly charges and fumbled mortgage applications is to see how things play out in the next 10 years or so. If you are tempted to take your customers for granted then I urge you to reflect on: what Amazon did to the book publishing/selling industry; what Apple has done to numerous industries including music, mobile phones, computing; and how the mighty like Tesco, Nokia, RIM have fallen.
Note: This is my first and last post for August. I am taking time out and intend/expect to be back in September. For my part, I wish you well and thank you for taking the time to read what I write and share your views.