What is the word that best describes or points out the fundamental context/orientation that underpins business as usual? It occurs to me that the word is “taking”. Taking as much as possible from the customers. Taking as much as possible from employees. Taking as much as possible from suppliers, Taking as much as possible from the community. Taking as much as possible from the planet…..
From the context of taking you get personalised emails and direct mail that does not show up as personal. From this context of taking you get the incessant focus on replacing human customer service with self-service and the switch from skilled staff to unskilled and cheaper staff. From this context of taking you get the focus on upselling, x-selling, and increasing wallet share.
I have yet to find any meaningful and enduring relationships that are based on taking. Where the context of taking is present all that shows up is taking. And people coming up with ways of protecting themselves from being taken. This is not the case for giving.
Where actions flow from a context of giving then it is possible to arrive at symbiotic relationships. Symbiotic relationships are ones where each party brings something of value to the other such that both benefit. It occurs to me that the strongest relationships tend to be symbiotic. Symbiotic relationships start with one party giving – giving something of genuine value to the other party.
Why are so many companies struggling to generate meaningful-enduring relationships with their customers despite their investments in all kind of customer stuff? Why is it that a genuine shift towards a customer centred orientation is so difficult? I say it is difficult because all this effort and investment arises from a context of taking. Whilst this may not be obvious to the people in the company it is obvious to customers – our bodies can tell the difference between those who care for us and those who do not.
Allow me to share an example two example with you. Examples that will illustrate the difference between taking and giving. Let’s start by looking at the taking orientation.
This week I brought a training course. To make the sale happen the supplier offered a 10% discount amounting to £100 and threw in some extras. Given that it is summer and there is less demand for the course it makes perfect sense for the supplier. And it showed up as an attractive discount for me given that I was going to buy the course with or without the discount. Did this discount build any gratitude, any relationship, any loyalty? No. I am clear that the discount served the needs and interests of the supplier.
Are there any companies that excel at giving? It occurs to me that giffgaff, a mobile network provider, is one such company. Earlier this month I got a email from giffgaff letting me know that the best tariff for me was the £7.50 tariff. By providing me this information giffgaff gave me the choice of switching from the £10 tariff. I didn’t switch tariffs. Nonetheless, I am delighted with giffgaff – I am delighted that giffgaff is practicing what it preaches, that the folks at giffgaff are living their values.
Let’s take a moment to look at my experience upon receiving the email. First, surprise. Second, delight. Third, gratitude. Fourth, satisfaction in having chosen giffgaff. Fifth, loyalty validated and cemented. Sixth – advocacy as in writing this post. Put differently, giving by giffgaff has called forth giving by me. I should point out that it is not just me. My wife has been telling a similar story to her circle of friends and colleagues.
The lesson? I say genuine-meaningful-enduring relationships are built upon mutual giving. I say you cannot build such relationships from a context of taking – the context that underpins business as usual. I say that as human beings we are always on the lookout for people and organisations that are trustworthy and on our side – looking after our best interest.
It occurs to me that if the people in companies pursuing customer experience, customer-centricity, even customer obsession, were to focus on giving and not clever ways of taking then they would have more success in fostering customers who are genuinely loyal.
What do you say?
This is a long post and a philosophic one so you might be better off doing something else unless you have an avid interest in customer-centricity and getting to grips with it. Furthermore, you might not like what I share here. It may disturb you and you find yourself annoyed even angry at the nonsense I am speaking. You are warned, now let’s begin.
Cutting through the confusion/tiresome debate around customer-centricity
There is much speaking/writing/debating on customer-centricity. Listening/reading/taking part in this ‘conversation’ it occurs to me that there is so much confusion about customer-centricity and the term has either become discredited or will be if we carry on as we are carrying on. So I write this post to bring clarity and workability to customer-centricity.
It occurs to me that the confusion around customer-centricity arises as a result of two distinct ways of talking about/making sense of customer-centricity being collapsed into each other. It is because of these two distinctions that it is possible for an organisation to be customer-centric and ‘not customer-centric’ at the one and the same time. There are subtle nuances around these distinctions which provide more distinctions. For the sake of brevity I am only going to explore/share the two big distinctions and ‘uncollapse’ them.
Customer-centricity as means (vehicle to get you to your end destination)
As I understand it, the marketing literature that brought ‘customer-centricity’ into the mainstream is concerned with customer-centricity as a means – as a vehicle for attaining marketing objectives. The business literature followed so that when ‘business strategists’ talk about customer-centricity they are talking means of accomplishing business objectives. When these marketers, these strategists, talk about customer-centricity then they talk about the course of action that the business takes (strategy). And they talk about organisational design – the way that the business should be organised (structure, roles, KPIs, management information etc) around customer segments rather than products.
In a product-centric company management is concerned with finding ways of selling more products to whoever can be made to buy the products. And the measure of success at playing this game is market share. Furthermore, in a product centric company the company will be organised around products. Business unit A will focus on one category of products from manufacturing/sourcing through to selling/servicing. Business Unit B will focus on a different category of product. When it comes to information you will find that it easy to get hold of information on/around products. For example, you will be able, easily, to find out how much of a particular product was sold; you will not be able, without considerable effort, to find out which products a customer bought across the entire product range supplied by the company as a whole. Then there is understanding / insight: you are likely to find that there is a lot of understanding of products but understanding/insight regarding customers (the context of their lives, what matters to them, how they buy etc) will be shallow.
According to the theorists and consultants the management of a customer-centric company should be concerned with ‘share of wallet’ not market share. The organisation should be organised around customer segments. And the strategy should be concerned with generating deep insight into customers and using this insight to come up with products, services, solutions even experiences that get customers to buy more from the organisation whilst costing less to serve. This may mean sourcing/creating new products to meet newly identified unmet needs. Or it could mean coming up with better value propositions: re-jigging how and what you communicate so that these customers buy more from you. The theory goes that if you do this then your organisation will keep more of your customers and they will ‘recruit’ new customers for you through word of mouth marketing.
So this school of customer-centricity, customer-centricity as means to, is concerned with changing organisations from being product centric to customer-centric. Or from an ‘inside out’ orientation to an ‘outside in’ orientation. So the talk deals with formulating customer-centric strategies, changing/transforming the organisation, putting in CRM systems…….
Notice that when taking about customer-centricity as means there are no moral questions, no moral considerations. In this clearing one grapples with formulating the right strategy, the right organisational design, picking the right CRM systems and bring about the desired change.
Customer-centricity as ends (‘for the sake of which’)
This is where it gets interesting. It is possible and some people do talk about customer-centricity in terms of ends/purpose. You see it is possible and necessary to ask the question: why, for what purpose, are we going to all this effort to move from being product-centric to customer-centric, from ‘inside-out’ to ‘outside-in’? Heidegger came up with the distinction ‘ for the sake of which’, which I want to use. All this effort to be customer-centric (as means) what is it for the sake of?
Read the literature that is used to by theorists, consultants and technology vendors and you find your answer: for the sake of the profit motive, for the sake of making higher profits. So the fundamental centre of the game of business has not changed at all. The be all and end all of the game of business continues to be the profit motive: making the numbers to enrich shareholders. Just the means has changed. That is fine. And consistent with customer-centricity as means.
Now throw into the mix a very different bunch of people. People who have a different understanding and speaking of customer-centricity. These people say that for a company to count as customer-centric, it has to be run ‘for the sake of contributing to / enriching the lives of customers’. These people are not naive, they get that for a company to survive it has to be profitable and it has be concerned with making profit. And they argue that the key difference is that the profit motive is secondary: a requirement to play/stay in the game rather than the raison d’etre of being in and playing the game.
Look, you and I have to be concerned with food/eating yet that is not the reason we choose to live, that is not what our lives are about. Or consider Steve Jobs. Jobs claimed that he never did it for the money. He claimed that he was driven, obsessed with, creating products that he loved to use, his family friends loved to use, products that he could be proud. Yet, Jobs was enough of a pragmatist to know that Apple needed to be profitable. When he came back and took the helm at a bloated and almost bankrupt Apple, Job was ruthless in making tough decisions including cutting product lines, distribution channels and firing employees that did not meet the standards/requirements set by Jobs.
Where did it customer-centric as ‘for the sake of contributing to / enriching lives of customers’ originate? As far as I can tell there are two sources – the Scandinavian school of relationship marketing and the Services school coming out of the USA. I am thinking of the likes of Gronroos, Berry, Parasuraman, Heskett, Sasser, Zeithaml and Bitner. Read through this literature and you will come across moral values and considerations, including customers as ends in themselves and not just simply means, even if they are well disguised. Why disguised? I say because these guys were seeking to get traction and influence the powerful ‘hard’ types in business.
Why it is that your organisation is not customer-centric even if it is customer centric and how it explains the lack of authentic customer loyalty
By now you should get why it is that one person can say that an organisation is customer-centric and another person can say that this very same organisation is not customer-centric. And they can both be right, be speaking ‘truthfully’: one is talking about/pointing at customer-centricity as means and the other is speaking about /pointing at customer-centric as ends where the ends is for the sake of contributing to / enriching the lives of customers.
According to surveys, executives consider their companies to be customer-centric and yet few customers consider companies to be customer-centric. The executives are standing in the clearing customer-centricity as means and customers are standing in the clearing customer-centricity ‘for the sake of contributing to / enriching customer lives’. So is it any surprise that standing in two different spots they see very different views and come up with different answers?
I say that vast sums have been spent in the name of customer-centricity and they have not delivered the promised land. Why? because companies have continued to play the same game (the profit motive) and simply changed the means: customer-centricity as means. They are not at fault. They have been encouraged in following this path by legions of marketing theorists, business strategists, consultants and technology vendors. Yet, this path can never lead to the promised land. Why?
Because when the customer talks about a company being customer-centric he is talking about and pointing at a company that shows up for her as being in business ‘for the sake of contributing to / enriching the lives of customers’. And so few companies are playing this game.
Let me tell you a story
An angel disobeyed God (so goes a story by Tolstoy) and is punished – thrust naked into world, a churchyard of a small Russian village. A poor cobbler passing by, ignorant of the angels divine origin, saves him from freezing to death; gives him clothing, food and shelter; and keeps him on as an apprentice. Several years pass.
Then one day this fallen angel smiles in such a way that his face radiates an extraordinarily dazzling light. The cobbler begins to wonder about his guests origins and asks him why such a radiant light shines about him. The angel then reveals himself for what he is, explaining that the only way he will be able to go back to Heaven is to learn what people live by.
He says that his understanding had begun when – having turned into a man – he was rescued from freezing in the churchyard. Now, continues the angel, he has finally realised that human beings cannot live each for himself, that they are necessary to one another, and that love is what they live by.
As customers we may not want relationships with companies, with businesses. Yet we can tell when we are loved. When it occurs to us that a company, an organisation, loves us then we cannot help but form a bond, an attachment with that company. When I think of such bonds of attachment I think of USAA. It occurs to me that this company does exist for the sake of contributing to and enriching the lives of its customers – military personnel and their loved ones. Clearly customers ‘feel the love’ and reward USAA with their loyalty. Which may explain why USAA is the leader/the exemplar of customer loyalty in the categories it operates.
Do you love your customers? Do you love your customers like USAA does? Or do you love the profit motive and fake love for your customers?
The implications for Marketing when the company|customer ‘relationship’ is viewed through SD Logic
I have been reading this deck that has been posted on Slideshare by Wim Rampen. In this presentation Wim is making the case for looking at the business|customer ‘relationship’ through Service Dominant Logic. In a nutshell SD logic states that service is the fundamental basis of exchange between the company and the customer; products are services in disguise – you go and buy a drill to get access to the service of drilling a hole/s, there is no intrinsic value in the drill itself.
Looking at the business|customer relationship Wim makes the following point (I have modified his language to make certain concepts clearer):
If value for the Customer is dominantly created after the value exchange (buy/sell when goods are transferred from producer to the consumer), ie. IN USE, both the scope and content of MARKETING STRATEGIES SHOULD SHIFT from dominantly focused on creating momentum for value exchange (promotion /selling) to a continuum of interactions aimed at supporting the customer’s value creation process.
Do you get it? Wim is asking marketers and the Marketing function to shift from doing what they current do to designing and orchestrating the Customer Experience – across all interactions and touchpoints along the customer’s journey from research through to ownership and usage. This is how Wim puts it:
Marketing has to shift “from campaign and communication design to service experience design, end to end..”
Accepting this as the ground, the context, out of which Marketing operates, Wim goes on to spell out the key jobs that marketers and the Marketing function should be doing.
Wim Rampen: The 7 jobs that fall to the Marketing function
1. Understand customers’ value creation process (= jobs & desired outcomes) and where in the process customers fail to meet their desired outcomes;
2. Build relationships in communities of people with similar desired outcomes and behaviour;
3. Support customer’s value creation process;
4. Design experiences that stimulate engagement through interactions in networks of relationships;
5. Engage employees and partners in supporting customers in their process of value creation;
6. Extract actionable insights from 360-degree feedback to foster innovations and to turn them into value propositions that attract new customers; and
7. Redesign metrics to capture the engagement value for the firm and ensure there is high correlations between these metrics and customers value created.
Is Wim is asking too much of marketers and the Marketing function?
Lets assume that these are the jobs that need to be performed when it comes to the customer|customer relationship. Now the question is do marketers (and the Marketing function) have the required skills to do these jobs? Many of us would say that they do not. Yet, that is not an issue because people who do have the skills can be brought into the Marketing function. Do marketers have the required mindset and attitude? That is debatable – people, as groups, are loathe to let go of their mindset, values and attitudes. Yet, it is doable so let’s assume that marketers and the Marketing function can make that shift.
Now we come up with the more interesting question: does the Marketing function have the influence, the clout, to design and orchestrate end to end Customer Experience / “service experience design”? Before you answer this question get present to what is being asked of the Marketing function. The Marketing function is being asked to orchestrate the mindset, metrics and behaviour of all the functions and people in the enterprise: product development, sales, customer services, logistics, finance, human resources, information technology…. Is that realistic? And if that task falls to the Marketing function then why have a CEO or the Board of Directors?
Look into what is so (reality) and you are likely to find that the Marketing function is simply one piece on the corporate chessboard and its mandate / role is limited to using advertising and spin to stimulate demand for the products that the corporation makes and needs to sell. That is all that is expected of the Marketing function. Sit with marketers and you are likely to find that they feel boxed in, limited, by the space that they are given to play in. Only a few Marketing functions control the 4Ps – most only control one P, Promotion. What I am pointing at is the gulf between marketing theory and the reality on the ground.
We are looking at organisational transformation and Marketing cannot lead that
Continue looking into reality and you are likely to find that the Marketing function that has little respect in the Boardroom or within the organisation in many if not the majority of companies. If that is so then how is the Marketing function going to take the lead an, in effect, transform the organisation: product development, sales, customer services, logistics, finance, human resources, IT etc – they all have to play together to provide the kind of end to end service experience that Wim is talking about.
The role of organisational renewal and transformation belongs to the Tops (the CEO and the senior leadership team) and not the Marketing function. Collectively the Tops need to: buy into the services dominant logic way of looking at the business; articulate an inspiring vision of the future and convert this into a blueprint; have the guts to requisition and deploy the right resources to convert that blueprint into reality; roll their sleeves up and help in turning the blueprint into reality; see it through to the end – be committed to the end goal; and be flexible and patient in going around obstacles on the path – there will be many obstacles.
If you are still in doubt over the point that I am making then ponder this: how likely is it that one of the States in the United States is in a position to influence and orchestrate the agenda / priorities / behaviour or all of the States in the United States so as to create harmony across all? Then ask yourself if you did want that kind of harmony – say in the laws that apply – across the States then who is best placed to lead that task? Is it really one of the States? And if it is, which one is best placed, has the most credibility, the most influence, to bring about that kind of change? Then ask yourself how long this process is likely to take?
The story state of Customer Experience
Dave Brocks latest post (selling disguised as relationship management) and Beyond Philosophy’s Global Customer Experience Management Survey (2011) which made the point that a lot of stuff that is not Customer Experience is being badged as Customer experience got me thinking about this sorry state: lots of talk, lots of people with the right titles, lots of spend on technology and yet the same old organisational behaviour. Which begs the question: why it is that only a few companies truly excel at Customer Experience and customer-centricity? Now I can list all the usual candidates: spaghetti like systems, silos, channel proliferation, organisational design, conflicting agendas & metrics and so forth. That is exactly what I am not going to do because I believe that these are red herrings that are used to paper over what is so. So let’s take a skeptical look at business and see if this sheds any light.
The smuggler, the border guard and the wheelbarrow
Every day a man turns up at the border with a wheelbarrow and some stuff in it. Every day the border guard examines the stuff in the wheelbarrow convinced that the man is smuggling something. Some days the stuff is clothes, other days footwear, sometime watches, sometime blankets yet none of the stuff in the wheelbarrow is contraband and so the border guard reluctantly allows the man across the border. This goes on and on until the border guard retires. Shortly after that the border guard and the man meet accidentally and the border guard asks him to say what he was smuggling. The man replies “Wheelbarrows!”
Let’s stop for a moment and look at the whole customer stuff: customer satisfaction, customer focus, customer loyalty, customer relationship management, customer experience and customer-centricity. And ask the question: what is right in front of us that we are missing? What is our ‘wheelbarrow’?
The name of the game is neither Customer Experience nor customer-centricity
Is it easy to do well in a truly competitive industry? No, it is hard work. What is the ideal scenario for every company in a competitive space? To become the monopoly supplier. Why is this appealing? Because, you can dictate terms to the customers and they have to play ball. When you are in that position you do not have to bother with all this nonsense about customer focus: customers are difficult, being customer focussed is hard work and besides it stops you from making monopolistic rents. If you cannot have a pure monopoly then you can get something like it – and oligopoly. This is where a small bunch of companies control the market: they sell similar products, at similar prices, in similar ways and have the same business models. In effect, they ‘agree’ to carve up the market and the profits. Often these industries have high barriers to entry and so there is no real competition: think banks, utilities, telecoms…….The last thing that any CEO, Board of Directors or shareholders want is a truly competitive market. Why? Because you have to fight for customers and their wallet. Which brings us to an important point.
What has changed is that the traditional means of attaining this outcome no longer work as well as they used to. Originally there was control over valuable natural resources and distribution channels. Later, control of intellectual property and shaping the mind of the consumer through advertising, branding and PR. Since the rise of the internet the traditional means (resources, distribution, IP, advertising..) have not been working that well. Just think of the disruptive power of the internet: you no longer need stores and all the capital that goes with that; your market is the whole world and you do not even have to setup a website – you can pitch your tent at ebay and sell to the whole world; and customers are awash with useful information that makes them better informed, smarter decision makers and more discriminating buyers. This is why we have heard and read so much talk about targeted marketing, relationship marketing, permission marketing, personalisation, customer focus, customer service, customer experience, customer-centricity.
Does that mean that there has been a wholesale transformation of the heart (love of the customer) or of the head (change in worldview)? I am think that there has been no such change. The game is still the same: to orchestrate the levers of power to become monopolistic suppliers and thus extract monopolistic rents. And if that is not possible then many businesses do the utmost to get the better of customers (too many option, complicated pricing, misleading advertising, dumbing down customer service etc) to maximise short term profits. If it is the ‘age of the customer’ (IBM says it is) then we are talking about many businesses being dragged kicking and screaming into the ‘age of the customer’. Many if not almost all would prefer the good old times when customers had no voice, no power and simply put up with what they were given. Take a good look at the laggards (you know who they are) and you will notice that they still hold monopoly type positions, accrue monopolistic rents and continue to pay lip service to customer service and ‘the customer is king’.
If you see this then you can see the ‘wheelbarrow’ that is right in front of us and which we may have been missing: the vast majority of businesses want and strive to become monopolistic suppliers so that they can monopolistic rents without the hard work of being customer-centred. If you accept this then you can understand that whilst the titles of changed from “Sales” to “Relationship Manager” the hidden objective is the same: sell more, increase “share of wallet”. You can also understand why business process management, lean, cost-cutting via self-service technology, customer service, marketing etc have all been rebadged as Customer Experience – changing labels is the easy part and Drayton Bird has an excellent/witty post on this. Put differently, all the talk of customer focus, customer service, CRM, Social CRM, customer experience and customer-centricity is simply the bric-a-brac in the ‘wheelbarrow’ that prevents us from seeing the ‘wheelbarrow’ for what it is. Any real form of customer-centricity (as opposed to the talk) is being brought on by new entrants to the battleground. And by the power wielded by customers who now have the technologies and platforms to be better informed, make smarter decisions and make their voices heard.
To excel at customer-centricity, Customer Experience and customer loyalty you have travel along the road less travelled
Which bring me back to my original question: why do only a handful of companies excel at cultivating customer loyalty? Because by design or by accident the people who started these companies operate from a customer centred paradigm and have built customer-centred business models, cultures and organisations. And the leaders of these companies were willing to play the long term game. How long did it take for Amazon to become profitable? What about Zappos? Is USAA simply a vehicle for churning out profits for shareholders or an organisation with a mission to service members of the armed forces? Starbucks is a great example of a company that made it fortune by understanding customers human needs and delivering them (“the third place”) and then got itself into trouble by forgetting this mission (and associated values, operating practices) and chasing growth and profitability targets set by the analysts. Starbucks had to go back to the basics to connect with their customers and win them bac
Perhaps this handful of companies (Amazon, Starbucks, USAA, Zane Cycles, Zappos..) will provide the inspiration for authentic customer-centricity: O2 (UK mobile telecoms operator who does not think of itself as that) is a company that has embraced customer-centricity with a fervour that is necessary to be an experience services brand and organisation. In the process it has become the leader in the UK telecoms industry: brand, revenues, subscribers, profits. The recent Ofcom results show that “The least complained about mobile provider….was O2, with 0.02 complaints for every 1000 customers compared to 0.14 in the case of 3UK.” This is remarkable when you consider that O2 was spun off from a former state monopoly BT in 2001. And birth O2 was viewed as a second rate player in the telecoms market and some doubted its future prospects. Maybe more executives will follow the lead of O2 and genuinely orient their companies around customer, customer experience and customer-centricity.
A final word
To excel at Customer Experience and customer-centricity you have to have an affinity for people as human beings. I will go further and say that you have to connect with and care about your customers as human beings first and wallets second. Going even further I’d say you have to love your customers and show them that you love them. In my view this is and has always been the great (hidden) strength of Steve Jobs and Apple: a deep affinity for the misfits, the rebels, the people out to create a more beautiful world. If you can see merit in what I am saying then I recommend that you read the following insightful post by Pete Abilla: How to be human
What do you think?