2014 State of Customer Experience: Who Are UK’s 2014 Leaders And What Can We Learn From Them? (Part 3)
This conversation continues on from where the earlier one ended. As promised, I have been looking at what Nunwood has to say about certain brands. And find myself in a position to share with you the table that I have put together:
What Does It Take To Be A Customer Experience Excellence Leader?
Just about everyone I come across business is looking for the answer, the recipe, the formula for turning the ordinary into extraordinary, base metal to gold; Nobody has or makes the time to linger, to think and rethink, to grapple with, experiment, and finally arrive at a home made ‘solution’ to any serious challenge. So is there a recipe/formula for CX excellence?
If there is, then it is worth taking a look at First Direct as it is in top place in 2014 and has consistently been in the top 10. Here is what the folks at Nunwood say on the matter (bolding mine):
The First Direct formula is remarkably simple one, yet it has proved difficult to implement in other organisations: remove the barriers between customers and the bank; employ people who want to serve the customer and care about doing a good job; train them intensely and empower them to handle and resolve any issues brought to them by the customer.
What does this look like from a customer perspective? Let’s listen to a First Direct customer:
I was in Venice when my credit card was refused and it was quite stressful. I phoned First Direct and talked with a patient man with a great sense of humour who spent time talking to me about the holiday, acknowledged this this was a stressful thing to happen and worked methodically to sort thing out. I rarely phone First Direct as I can do almost everything online, but is was so important that when I needed them, they were unfailingly polite, human and ready to treat me as valued customer.
What Is It That Is Missing From The CX Game Of Excellence?
I have read the Nunwood report several times. And putting this report together with other reports and my lived experience I find myself thinking “There is no rocket science here!” and find myself in agreement with the author of the Nunwood 2014 UK CX report when they say (referring to First Direct) that the formula for CX excellence is a remarkably simple one. So why is it that so many brands fail to make any meaningful shifts/progress in CX excellence? Allow me to point at what occurs to me as ‘that which is missing the presence of which makes all the difference’ by sharing a personal story with you.
Earlier this week I was due to be at an important meeting in central London at 10:00. Seven people were counting on me to be there to ‘chair’ the meeting. I was counting on myself to be there to chair the meeting. The unexpected occurred on my way to the rail station. I found myself at a stand still on the road for 45 minutes or so. I took the next train – thirty minutes later than I had planned. This meant that my contingency was gone – everything had to work out just right if I was to make that meeting on time. I arrived at Paddington Station and made my way hurriedly toward the underground. Suddenly, I found my feet sliding, no control, left knee smacks into the hard tile floor, right leg twists awkwardly, the right ankle is in some pain. A helpful gentlemen helps me up. I recover and get that the floor has become an ice rink in some place (food for a future post). I walk slowly, in pain, towards the underground. The up escalator is out of action so I make my way up the stairs – slowly and awkwardly, in pain. I walk for several minutes to the underground entrance. It is closed. I ring both of my colleagues and the client to let them know that I am likely to be late.
Making my way to the taxi rank I notice a long queue and get that if I wait there I will not get to the meeting on time. So I make my way down the stairs and out of Paddington Station. Leaving the station, the rain falls down and I start getting wet. I walk away from Paddington station and towards central London. Why? I get that I have to get far enough away from the station to find an empty taxi. As I am walking I am in pain and mindful that I have to walk carefully on my sprained ankle. After walking for 5 – 10 minutes I find a black cab. I tell the cab driver that he is blessing, a Godsend. We arrive at the client’s office – five minutes after the meeting has started. What do I find? The meeting is on the sixth floor and all the lifts are out of service. What do I do? I embrace the pain, walk as mindfully and carefully as I can, and make my way up the stairs to the sixth floor. I chair the meeting, we do what needs to be done. Just after noon I leave and make my way home as I am in considerable pain.
What was it that allowed me to overcome a series of obstacles and considerable pain to honor my commitment? Absolute commitment to the commitments that I make: playing full out to honor my word. Ask yourself how often you find that kind of commitment when it comes to the CX realm. Now you have your answer to why it is that so few are CX Excellence Leaders and most are languishing in ‘no mans land’ of averageness.
Enough for today. In the next post I will bring this series of post on the Nunwood 2014 UK CX report to a close. I wish you a great day and thank you for your listening.
2014 State of Customer Experience: Who Are UK’s 2014 Leaders And What Can We Learn From Them? (Part 1)
Yesterday, I received one of the few publications I find worth reading. Which publication? The 2014 UK Analysis put together by Nunwood‘s Customer Experience Excellence Centre. In this series of posts, I will be sharing with you my take on this report and its findings and recommendations. Let’s start with the dominant themes.
Little Change In The State of Customer Experience Excellence From 2013
The foreword by Marketing Week is full of the kind of exaggeration-hype that goes with much of marketing:
With customer experience now firmly established as the main competitive battleground for ambitious leaders, this is a uniquely rich insight into the best practices needed for success…..
- Mindi Chahal, Features Writer, MarketingWeek
Did you get the clue? The clue lies in the adjective ambitious as in ‘ambitious leaders’. It turns out that of the 250+ brands surveyed by Nunwood only a very small number are ‘ambitious’. And as such little has improved overall as regards the state of customer experience excellence in the UK. Which kind of makes me question the claim that customer experience is now firmly established as the main competitive battleground. My experience is that whilst it is talked about, that is pretty much all that happens: talk.
What do the folks at Nunwood say on this matter? This is what they say (bolding is my work):
A minority of brands are shining every brighter …… These examples of brilliance are dimmed by the larger set of brands whose efforts have stalled. Either because they have hit cultural glass ceilings …… or the ambition of their leaders has failed to match the rising expectations of UK consumers … This has meant that across all 263 brands analysed the overall improvement in performance was less than 1%.
The Biggest Improvement In Customer Experience Excellence Has Occurred In The Financial Services Sector
Which sectors show an improvement? Three of them: financial services, entertainment & leisure, and travel & notes.
Which sectors are stagnant? Three of them: telecommunications, restaurants & food, and non-food retailing.
Which sectors have declined? Two: utilities, and grocery retailing.
Did the financial services sector make the 2.2% improvement due to benevolent-enlightened leadership? Or a new found love of the customer? Or was it because some teeth have been put into a regulator and regulation? Here is Nunwood’s take on the situation (bolding is my work):
The financial services sector sees the largest improvement in performance …. This is in no small part due to the burning platform created by the government, media and regulators. New FCA-mandated focus on customer outcomes … has led to massive investments and exhaustive leadership attention.
It occurs to me that here we have a clue as to why there has been little or no change in all the other industry sectors. Organisations and the Tops that lead them do not willingly stop screwing their customers and employees. And so switch from the easy and established way of making ‘bad profits’ to doing the hard stuff of generating superior customer value and thus reaping ‘good profits’. This kind of behaviour is arrested and weakened through a combination of effective regulation and sustained media pressure. Which may explain why it is that the utilities sector, which has been the weakest in terms of customer experience excellence has slipped further down the rankings. In my view-experience the Ofgem, the regulator for gas+electricity market, is about as toothless as you can get.
The Same Brands Continue To Shine And Some Shine Less Brightly
By now, I suspect that you may really want to know who the UK’s Customer Experience leaders are. Here are the top 10:
1. First Direct (bank without high street presence)
2. John Lewis (multichannel retailer)
3. QVC (tv based shopping channel)
4. Lush (retailer)
5. Amazon (online retailer)
6. Appliances Online (online retailer of appliances)
7. Waitrose (grocery retailer)
8. Nationwide (building society, financial services)
9. Specsavers (retailer)
10. M+S Simply Food (grocery retailer)
10. Your M+S (retailer)
Here are my take on this Top 10 list in comparison with 2013:
- Virgin Atlantic and Ocado have dropped out of the Top 10. Virgin is now at number 21, and Ocado just outside the Top 10 at number 12.
Appliances Online, Nationwide, and Specsavers are new to the Top 10. This is what Nunwood says about Appliances Online (ao.com):
A clear value proposition wedded to an excellent service culture sets the brand apart.
- Amazon continues its slide down the rankings here is what Nunwoods says:
Amazon …… continues to slip slightly in the rankings for the third year in a row, as consumers react to declining perceptions of its integrity and the performance of its delivery companies.
Waitrose ascends the rankings moving from being number ten (2013) to being number 7 (2014).
M+S (both Simply Food, and Your M+S) descend towards the bottom of the Top 10 in 2014.
My personal take is that Your M+S is a retailer in trouble. Management, probably in desperation, are bullying store managers. This then cascades down to the people on the shop flower. And in turn impacts the customer experience. So it will be interesting to see where Your M+S stands in the 2015 rankings.
The Secret of Customer Experience Success: Put Your Customers Second
You may have noticed that I insist on the need for and the critical importance of the human dimension: calling forth and putting into play the best of our humanity in order to orchestrate great relationships and generate great experiences. In short, to create a better world, a world that works for all: employees, suppliers, management, customers, shareholders, and the community.
More than once I have spelled out that the access to great customer experience lies through the folks that actually interact with and serve customers: the people working in the business and especially those who interact with and serve customers on a daily basis. Not technology! Technology can enable or hinder the customer experience. It is merely a tool.
Which means that there cannot be excellence in Customer Experience without excellence in Employee Experience. And these two have to be in tune with one another.
What does Nunwood say on the matter? Here is what Nunwood says (bolding is my work):
With only a single exception, the top 10 ‘Champion’ brands are characterised by their evangelical employees and superior cultures. Employees who are exceptionally proud of the brand they represent and the job they do each and every day for customers. Their culture plays a pivotal role in creating outstanding customer experience and they value that some culture first and foremost. In a very real sense, employees come first and customers come second.
Which is the single exception? I take it to be Amazon. And in the longer term this could be the undoing of Amazon.
Enough for today, I will continue this conversation in the next post. In that conversation I propose to explore the underlying factors that show a correlation with Customer Experience excellence. Until then I wish you the very best.
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.
This conversation follows on from where the previous conversation left off. Specifically, I intend to share with you the theory behind the shaping the work context approach to changes organisational behaviour. And the limitations of using the traditional tools: hard and soft. Let’s begin.
It occurs to me that the fundamental assumption is that human behaviour is always functional. Which is to say that there is correlation between the human behaviour that occurs in a work context and how that work context shows up for the human beings who find themselves there in that context. Put differently, there is an ongoing dance between context and behaviour: each is influenced by the other on an ongoing basis. From this flows the following ‘advice’ from the authors of Six Simple Rules:
1. Human Beings As Purposeful Actors Making Use Of Resources And Dealing With Constraints
Human behaviour can be understood in terms of three elements. First, the goal/s, the towards-which the human being ‘moves’. Second, the resources-tools that are at hand to help ‘move’ towards the goal. Third, that which shows up as an obstacles-hindrance. Collectively, these three elements in their unity (as one) constitute the work context as lived-experienced. Here is what the authors say:
Understanding what people do and why they do what they do is so utterly fundamental that it is our simple rule. Before you, as a manager, do anything to solve a performance problem, you can save yourself a lot of time and money by first applying this rule.
2. Understand How The Organisational Elements Affect-Shape The Work Context
Do organisational structures, processes, procedures, and systems matter? Do they affect-shape human behaviour? Yes, they do affect behaviour and performance. But not in the simplistic way that most of us assume. According to the authors (bolding is my work):
Their impact depends on how they combine with each other to shape the goals, resources and constraints to which people adjust their behaviours.
If you do any cooking you will get that the impact that any one ingredient has depends on the other ingredients that constitute the recipe. If you manage stocks you will understand that it is not the risk of the individual stock that primarily matters – it is the impact of that stock on the risk profile of your portfolio. Hopefully you get the idea.
3. Be Wary of Taking The Hard (Scientific Management) And Soft (Human Relations) Approaches To Improving Organisational Performance
Let’s consider each of these approaches to understand why it is that the authors advise caution in automatically and mindlessly adopting one or both of these approaches as the silver bullet for dealing with organisational challenges.
The Hard Approach And Its Limitations
Why is there is much emphasis in the hard approach on clarity – clearly specifying the rules of the game, the roles and responsibilities of the actors, the boundaries, the rewards and punishments….? Is it because the hard approach takes it for granted that performance is a direct consequence of what people are instructed and rewarded-punished for doing? Let’s listen to the authors:
Structure defines the role, processes instruct how to perform it, and incentives motivate the right per on in the right role to do it. From this perspective, if there is a performance problem, then it must be because some key organisational element is missing or not detailed enough. So companies jump straight from identifying a performance problem to deploying new structures, processes or systems to resolve it. This error dumps a first layer of complicatedness into the organisation.
Let’s make this real by revisiting InterLodge. What did management do at the beginning? Did it not resort to restructuring and reengineering without actually looking into the work context that shaped behaviour? And when management did look at the front line what did it conclude?
Receptionists were not selling rooms to latecomers. They were not engaging the customers in a way that made customers satisfied. They were not charging the right room rate.
If you focus on what your people are not doing does this help you understand what it is that they are doing and what leads them to do what they do? Clearly not. So the authors advise the following (bolding is my work):
Performance is what it is, because people do what they do, not because of what they don’t do. People do what they do precisely because of the organisational elements already in place (not because of the ones that are missing)……
The authors go on to provide what I consider the most valuable and most neglected insight into human behaviour in organisational contexts (bolding is my work):
Organisational elements do not combine with each other in the abstract, based on their supposed intrinsic pros and cons.…. It is only by considering the work context, and their effect in this context, the organisational elements can be appropriately analysed and designed. The effect …….. depends on how people deal with these elements as resources or constraints.
What did the receptionists do with the “guest engagement” skills that they honed during the mandated training course? They used these skills as a resource. But a resource for what? A resource for their goal: avoiding stressful encounters with angry customers:
… they used their skills not to meet the target price point but to proactively offer rebates and refunds. What’s more, their new skills combined with their clarified roles in an unexpected way that also provided new resources to the receptionists……: some receptionists used their newfound interaction skills to explain clearly to guests that their responsibilities stopped at the front desk and did not include back-office activities…
Now you know why I am not a fan of worshipping at the altar of lean, six sigma, process and reengineering. And in the world of consulting, the anal retentive fixation on methodology. I learned the hard way: spending years doing it and seeing the meagre and often counterproductive results.
The Soft Approach And Its Limitations
As this post is already long I recommend that you get hold of a copy of the Six Rules for a fuller-deeper picture. For my part I leave you with the following:
…. the soft approach views performance as a by-product of good interpersonal relationships. But this view confuses people getting along with genuinely productive cooperation. Real cooperation is not fun and games….. it always involved adjustment costs.
Indeed, the better the feelings among individuals in a group, the more people are likely to avoid straining the relationship by bearing adjustments costs themselves or by imposing them on others …. So they will avoid cooperation and make third parties bear the consequences, or they will compensate with extra resources to remove interdependencies… the extra resources teak the form of …. excess inventory stocks, time delays, interfaces and committees, and customer requirements unmet….
Here I draw your attention to the never ending challenge that almost every large organisation has in getting just the folks in marketing (advertising, website, email, direct…) to work together – cooperate. Or the bigger challenge of getting the folks in marketing, sales and service to cooperate to generate a joined up and attractive customer experience.
If you wish to learn more but do not wish to read the book then I recommend the following TED Talk by one of the authors of the Six Simple Rules:
Imagine that you are the CEO of InterLodge. You face a big problem: your share price has been falling for some time. You need to do something to deal with the issues of high costs and low profitability. You find that the occupancy rate and the average price point per room are too low. And the surveys suggest that Interlodge’s customer satisfaction levels are well below where they should be.
Over to you. What are you going to do about this? What approach will you take? What levers will you use to address the issues?
What Did The Top Management Team Do?
The management team did what most management teams do? It restructured and reengineered. Specifically:
- It created a shared service initiative to serve groups of hotels by region. Why? To cut costs and drive up quality.
It redefined roles & responsibilities of hotel employees. Why? To improve productivity and focus resources on driving up quality.
It rolled out a new computerised yield management system. Why? To improve the occupancy rate.
Did the desired outcomes show up? No. The authors of Six Simple Rules state:
A year later, none of these changes had produced any of the improvements the management team sought …… The share price continued to slide.
What Did Top Management Do Next?
Top management took a bold step. InterLodge’s management committed, via a public announcement, to doubling its share price within three years. Why did management do this? Clearly to support-boost the share price and at the same time to energize the hotel employees. Did it work? The authors say that it had a powerful effect on InterLodge employees. The opposite of what management intended: terrified rather than energised. Why?
Because these hotel managers were expected to increase occupancy rates, raise the average price point, and improve customer satisfaction whilst working within the parameters set by the centralised yield management system, the shared services offer, the organisational design and staffing levels set by the centre.
So the hotel managers acted on the one measure that they felt they could make an impact on: customer satisfaction levels. They acted on the hotel receptionists. Why? Because they came to the conclusion that: the hotel receptionists were young and didn’t care about doing a good job; they lacked the right customer handling skills; and they were not selling rooms to travellers who arrived late in the day even when rooms were available.
So what did the hotel management do? Three things. One, they clarified roles, processes and scorecards. Two, they put the receptionists through a soft skills training course to improve their communication and guest engagement. Third, they set up an incentive plan to motivate the receptionists to sell more rooms and increase the occupancy rate.
Did it work? Here’s what the authors of Six Simple Rules say:
Six months later, however, the problems remained. In fact things had gotten worse. The occupancy rate had dropped further. Average price point was down. Customer surveys showed lower levels of satisfaction. Receptionist turnover had risen.
So what did management do next? It looks like they hired a bunch of smart consultants. What did these smart consultants do.
First, Seek To Understand The Work Context At The Concrete (Lived-Experienced) Level
The consultants sought to understand the work context of the receptionists at InterLodge. Please note that the work context is not the objective situation. By work context I am pointing at the work-context as experienced-lived. How does one get to terms with the work context? In this case, the consultant spend a month observing and talking with receptionists at various hotels. What did the consultants uncover?
- The most difficult, most unpleasant, part of the job for the receptionists was dealing with angry customers;
The receptionists had to deal with angry customers on their own – by the time customer’s rang down to complain the maintenance folks had gone home; and
The maids cleaning the rooms were best placed to spot problems and alert maintenance. Yet, they did not do so due to the silo based performance metrics to which they were held accountable – productivity in cleaning rooms.
What is the insight that eventually hit the consultants? Here it is in their words:
the goal of the receptionists was not to earn a financial incentive by improving the occupancy rate. No, the goal of the receptionists was to avoid the unpleasantness of dealing with unhappy customers.
How did the receptionists deal with the situation that they found themselves in?
- The younger receptionist sought to fix the problem themselves. This meant they found themselves running back and forth between their front desk and the problem rooms. This behaviour didn’t work for the customers who arrived at the front desk and found nobody there. And so had to wait.
They kept rooms in reserve so that they could placate customers. Why? Because even if the new room wasn’t so much better, angry customers appreciated the receptionist who went out of his/her way to help.
They adjusted the room rate downwards. The customer harnessed their new found guest engagement skills to negotiate a refund, rebate, or voucher to deal with angry customers.
What Can We Learn From This Understanding of The Work Context?
The authors have something powerful to say and I urge you to listen, really listen:
… the young receptionists were forced to bear the adjustment cost caused by the behaviour of the back-office functions [Housekeeping, Maintenance]. They had little choice in the matter, somehow, they had to deal with the angry customers. The adjustment costs they suffered were simultaneously financial (they didn’t achieve their bonus), emotional (they were blamed by both managers and customers), and professional (at a certain point they would become so burned out that they would quit….).
But customers were also bearing adjustment costs in the form of poor hotel experience. And of course, so were the shareholders in the form of declining returns….
Receptionists could never fully compensate for what the back-office functions [Housekeeping, Maintenance] could have achieved had they been cooperating with each other…
Once the management team took time to understand the context of the work in its hotels, it came to realise that the problem was not that the receptionists were badly trained, or had some psychological issue or attitude problem, or needed more incentives. Rather, their behaviours were rational solutions to the problems they faced.
What actions did the InterLodge management take to shift-shape-transform the work context? And what kind of results showed up? I will share these with you in the next post.