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What Has Motive Got To Do With Customer Loyalty?

More than once and by more than one ‘customer guru’ I have been accused of bringing moral considerations into an arena where moral considerations do not belong. Which arena is that? The business arena. Many folks are convinced that what matters in business is the right strategy (plotting the right course) and effective-efficient execution. According to these folks nothing else matters – except perhaps for good luck.

Are these self proclaimed rational, bottom line, no nonsense folks correct?  Frederick Reichheld published The Loyalty Effect back in 1996. And in so doing he put the matter of customer loyalty on the radar of business.  So folks in business have been working on building customer loyalty for almost 20 years. In the process, customer analytics, CRM systems, customer loyalty programmes, NPS, and voice of the customer feedback have become firmly established in big business.  What is there to show for it?  Which companies have, through these and other ‘vehicles’, cultivating meaningful customer loyalty?  Please name these companies. Now go back and ask yourself if the ‘hard headed’ business folks and the ‘customer gurus’ who pander to them are correct in asserting that moral consideration can be and should be left outside of the business arena.

I say morality matters. I say that the motive that gives rise to your ‘customer-centred’ actions matters: it makes all the difference! Allow me to illustrate the importance of motive through the words of  Edward Slingerland:

“On November 14, 2012, a tourist in Times Square surreptitiously snapped a picture of a police officer kneeling down to help a bare footed homeless man put on a new pair of boots. When posted onto the NYPD’s Facebook page, the photo went completely viral. The officer, named Lawrence DePrimo, had apparently been so moved by the suffering of the barefoot man that he popped into a nearby store to buy him a new pair of boots with his own money. “It was freezing out and you could see the blisters on the man’s feet,” he said when asked about the incident. “I had two pairs of socks and I was still cold”  The story was an enormous publicity coup for the NYPD, but the secret to its appeal was the spontaneity of the officer’s gesture and the happenstance of someone catching it on film.

Imagine if we found out later that DePrimo knew that the photographer was there and had been merely been grandstanding for the camera – his act motivated by the desire for fame rather than spontaneous compassion. This knowledge would instantly transform a heartwarming act of kindness into a horrible travesty. The very act itself would magically change, even though nothing would be materially different: the officer would still be out $75, and the homeless guy would still have a nice pair of boots that he didn’t have before. We have a powerful, ineradicable intuition that a “compassionate” action performed without the right motivation is merely a semblance, a counterfeit of virtue. The flip side is that evidence of sincerity and spontaneity in the moral realm inspires and moves us.

- Edward Slingerland, Trying Not To Try

As I said, morality/ethics/motive matters.  It is the thing that matters the most when it comes to the matter of relating, trust and loyalty. If it did not matter as much as it does matter then many a ‘wolf in sheep’s clothing’ would have made a success of their customer initiatives – cultivated meaningful customer loyalty.

Customer Relationships: Does It Pay To Tell The Truth?

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?

 

Amazon: Earth’s Most Customer-Centric Company?

Does Amazon deserve the label of ‘Earth’s most customer-centric company’?  Before I answer that question, allow me to tell you a little story about a well-known telecommunications company, one whose official strategy was to become customer-centric.

What Customer-Centricity Meant At A Well Known Telecommunications Company

I once did some consulting work for one of the world’s largest telecommunications companies. In the process, a certain kind of fellowship grew between me and the billing manager.  To some extent he was a frustrated man. Why?  The billing challenge was growing more and more complex: requiring more people, more expensive IT equipment, stronger oversight etc. .

What was the cause of the increasing complexity and thus challenge in billing?  The number of unique billing plans in place.  There were thousands of them. And most of them were legacy billing plans – many years old.  So I asked the billing manager, why he didn’t just move customers to the latest billing plans. And in so doing he would be free to delete the thousands of legacy billing plans that were the cause of the headache. Can you work out his answer?

He told me that he built a ‘business case’ and presented to his boss. Yet, the proposal had got nowhere because Marketing had vetoed is proposal. What was the basis of the veto?  The legacy billing plans were much more profitable for the company. Why?  Because compared to the latest, competitive, price plans, the legacy plans were overpriced.  And if the company took the decision to move these customers, arguably the most loyal as they had been with the company for a long time (3+ years), then this would mean giving away revenues and profits.

What did customer-centricity actually mean in this company? It involved lots of activity: vision statements, presentations, meetings, talk, customer research, mystery shopping, process changes, balanced scorecard.  What it did not involve was the conscious choice to do right by the customer: to put the wellbeing of the customer on par with the wellbeing of the company (revenues, profits, share price).

Does Amazon Deserve To Be Called The Earth’s Most Customer-Centric Company? 

We all know that Amazon works. It is easy to find and buy from Amazon. It is easy to keep track of where one’s order is. Amazon delivers the goods within the promised window. It is easy to return goods and get a refund. And on the only occasion something did not turn up when expected, I found it easy to get hold of Customer Services, and the call was handled by a friendly agent, who got my situation, validated my feelings, made  a promise to have the issue fixed by the next day, and it was fixed.

This level of performance has kept me doing business with Amazon despite my concerns over Amazon’s tax avoidance strategy, and the concerns about how Amazon treats the folks who work in the warehouses.  And to some extent my disposition towards Amazon has been a pragmatic one rather than one of affinity with what Amazon stands for.

This week the situation changed.  What happened? My wife signed up for the Amazon Prime offer and she then enrolled me into it as well.  As a result, I found renting and watching a movie (on demand) with my eldest son.  The experience of selecting, paying for, and watching the movie was effortless.

The next day, to my astonishment (I do not use the world lightly), I found myself reading the following email:

Hello, 

We’re contacting you about your recent attempt to purchase “The Wolverine”. We recently learned that a technical issue may have prevented you from being able to watch this video. We’re very sorry about this. 

To help make it up to you, we’ve issued a £3.48 for this order. The refund will be applied to your original order payment method and should complete within the next 2-3 business days. 

We look forward to seeing you again soon. 

Sincerely, 
Customer Service 
Amazon.co.uk 

Please note: this e-mail was sent from a notification-only address that cannot accept incoming e-mail. Please do not reply to this message.

Why was I astonished?  I was and continue to be surprised that there is a commercial organisation that gives!  What does it give?  Proactive service. An apology. A refund. And all on the basis that a technical issue may have prevented me from watching the movie!

Once I got over my astonishment who was I left thinking-feeling?  Given that I had watched the movie without any problems, and Amazon had been generous, I found a strong urge to contact Amazon and ask them to take their money back. Why?  Because, I was brought up to repay good with good, generosity with generosity, considerateness with considerateness.  Then I read the bottom of the email and found I could not reply to the email.

What did I find myself doing within 24 hours of receiving this email? I found myself buying a book, that I had been meaning to buy and had not bought, for £9 and watching a movie that I had not been intending to watch (this week) for £3.49.

Why did I do this?  It occurred to me that I could not treat badly one who has treated me well. And as such I felt a pull to repay Amazon’s ‘goodness’ by repaying the £3.49, which I did by buying and watching a movie on the day of the email.

If the acid test of customer-centricity is putting the needs-interests of customers on par with the needs of the company then I am in no doubt that Amazon is customer-centric.  Is this enough to show up as Earth’s customer-centric company? No. To win that mantle it occurs to me that an organisation chooses to prosper only by doing right by customers.  That is how Amazon shows up for me this week.  I cannot imagine any other company (that I am doing business with) taking the stance that Amazon takes in relation to its customers.

For those who are cynics, I get that Amazon may have taken a pragmatic decision to provide the refund so as to reduce the number of calls (and/or emails) coming into the call-centres.  Even if this is the case, then the action that Amazon has taken is smart. So at the very least the folks at Amazon are smart in a way that also benefits customers.

2013: Where Are We At With CRM, Customer Experience and Customer-Centricity?

What can we learn from Havas Media’s 2013 Meaningful Brands survey?

For me, the highlights from the survey report are:

  • Just 20% of brands worldwide are seen to meaningfully positively impact people’s lives;
  • The majority of people worldwide wouldn’t care if 73% of brands disappeared tomorrow;
  • Only 32% feel brands communicate honestly about commitments and promises;
  • 54% of us don’t trust brands; and
  • The meaningful brand index outperforms the stock markets by 120%.

It would appear that the case for making a shift towards a ‘meaningful brand’ is compelling according to Havas Media and yet most brands do not show up as meaningful.  This shows up as interesting for me given all the talk-spend on brand, branding and brand building.

Let’s shift perspective and take a look at the situation through the eyes of Customer Experience.

What is the state of Customer Experience at the end of 2013?

In her November post, “Sucking Less” is Not a #CX Strategy, Annette wrote:

“Are organizations seeing the value of delivering a great customer experience? Clearly they pay lip service, but we know that actions speak louder than words. Do they really get it? No. There’s no real commitment of time, resources, and budgets to initiatives that improve the customer experience.

I spend a lot of time talking to prospects and clients about how to sell the value of customer experience to company leaders. It’s so disheartening …..”

My experience resonates with Annette’s.  And our experience is not unique – talk with Customer Experience professionals and you get a taste of how difficult it is to move the Customer Experience ball beyond conducting VoC surveys and collating-publishing the results.

So what is going on here? If Tops are VCs and Customer Experience is seen as investment then the Tops do not see the value of investing in Customer Experience ventures.

What is the state of CRM at the end of 2013?

It occurs to me that large established companies have spent large sums of money in the name of CRM – usually in procuring and implementing so called CRM systems.  What is there to show for this investment in terms of generating superior value for customers and cultivating meaningful profitable relationships with customers?

As I look around I find that the single customer view is just as elusive today as it was when Siebel was promising it, through the adoption of its CRM suite, back in 1999.  The gulf between the talk and the reality continues to stun me. So many companies still struggle to work out the totality of their relationships (products purchased, interactions) with their customers.

I notice that many marketing, sales and service (customer, field) processes are just as broken today as they were in 1999.  Why? Because too many people implemented CRM to automate the existing way of doing business.

It occurs to me that the challenge of getting the marketing, sales and service folks to genuine work together to build meaningful relationships with customers is beyond almost all companies.  These functions and the people in them continue to work in silos, pursue their functional objectives, and work to their particular style.

I notice that the state of fragmentation within the marketing function is higher today than in 1999 due to the proliferation of digital channels. Marketing has become so complex that a whole industry, marketing automation, has grown up with the aim of automating marketing with a view to taking the complexity out of it.

Why do organisations continue to grapple with the same challenges despite their investments in CRM and Customer Experience? 

Having been in the field since 1999 I am struck about how little has really changed despite all the changes that have occurred outside and inside organisations.  What is going on here?  Why is this the case?

It occurs to me that most of that which has taken place in the areas of CRM and Customer Experience has occurred in the domain of doing.  And this doing has arisen from the same old domain of being. And as such, the mode of being has poisoned-corrupted all the doing. How best to illustrate this? Think King Midas. Whatever King Midas touched it became gold.  Being has that kind of power: every action is tainted with the being that gives rise to it.  Yet, those who have walked the CRM and Customer Experience path have been oblivious to this corruption because the the current style of showing up in the world is so taken for granted that it is invisible to us:

“The way of life of a culture is not an explicit set of beliefs held by the people living in it. It is much deeper than that. A person brought up in a culture learns its way of life the way he learns to speak in the language and with the accent of his family and peers. But a way of life is much broader than this. It involves a sense for how it is appropriate and inappropriate to act in each of the social situations one normally encounters; a familiarity with how to make sense of things and of how to act in the everyday world; and most general of all, a style, such as aggressive or nurturing, that governs the actions of the people in the culture although they are normally not aware of it. We can think of it as a cultural commitment that, to govern people’s behaviour, must remain in the background, unnoticed but pervasive and real.

– All Things Shining, Hubert Dreyfus and Sean Dorrance Kelly

This sense of the being, of the default ‘style’, of organisations (and the people who work in them) is spelled out clearly by Vik Maraj in an interview published on the Huffington Post where he talks about the challenge of transforming the not for profit sector:

Question: What is the over-arching challenge in the not for profit sector? 

Answer: We act mostly inside of a context of charity not empowerment. Very few people are “learning to fish”. And this is a societal issue not just a not for profit issue.

Question: With respect to the not for profit  sector, what is the truth that we don’t want to talk about? 

Answer. We compete with each other with a smile on. We protect ourselves. And we collaborate in an opportunistic way. And the game is rigged such that this behaviour is almost inevitable. And the rigging is usually done by a decades old governmental policy…….

At first some of the obvious challenges are a lack of funding, a lack of resources, a lack of volunteers, turnover, a lack of being valued, lower salaries, lack of training and development, lack of policy, political unwillingness, the economy, etc. There are many more that I have not mentioned and what they all have in common is that none of them are the real problem.

Question: What’s the real problem, and what’s the answer?

Answer: The real problem is that we don’t collaborate and align our vast, often duplicated resources, talents, and mandates, to have a collective voice. Collaboration is both a missing mindset as well as a missing process. We mostly define collaboration as “getting together”. As one of our clients said, “[we act as] independent islands chipping away at symptoms”.

Almost all transformative change started with a series of small groups led by a few courageous people. They came together to tell the truth to one another, did the tough work to get over their differences, and then whole-heartedly went after an intolerable circumstance that each could not surmount on their own! The answer is to move from a “me or you” mindset to a “me and you mindset” and to stop pretending that we are always noble or even often noble!

Question: If this is the answer, at least one powerful answer – so then why aren`t we doing it? 

Answer: Good question. Given the common goals, overlapping skillsets, and in many cases overlapping client bases and services, why aren’t we truly collaborating and coming together to increase the power of our voice and share resources, information, and talent? Why? The answer is that there is too much self-interest and survival thinking to allow for this. Making it and surviving forms an almost inescapable context within which people operate.

If you are awake and have any lived experience of the for profit sector you will see the parallels.

Summing up, excellence in CRM and Customer Experience requires a transformation in the character (being) of organisations (and the people in the organisations especially the Tops) not just a change of clothes to project a more ‘customer friendly’ personality. This is a challenge that few have taken on wholeheartedly – arguably the CRM and Customer Experience fixes were actions designed to bypass the need for a genuine shift in being, in transforming from extractive capitalism to conscious capitalism.

Customer-Centric Leadership: What Can We Learn From Jeff Bezos?

Jeff Bezos and Amazon have been in the news courtesy of Bezos latest letter to shareholders. If you have any interest in what constitutes a customer-centric orientation then I throughly recommend that you print out this letter and read it. If you are up for creating a customer-centric organisation then I recommend that you read this letter every day.

Annette Franz on Jeff Bezos and Customer Experience

Annette Franz over at CX Journey has a written an enthusiastic post referring to Jeff Bezos as a CX dream come true!. I recommend reading it, and I share one particular part of her post with you:

As a leader, Mr. Bezos shows that he’s both the customer and the employee champion. Reading through the 2012 letter again, the following traits and qualities come to mind – all of which are certainly descriptive of a customer-centric culture:

  • Trust
  • Transparency
  • Best interest of customers
  • Integrity
  • Honesty
  • Not being opportunistic
  • Customers ahead of shareholders
  • Innovation
  • Passionate
  • Humble
  • Proactive
  • Delight

Do any of those describe your organization’s values and culture?

Bruce Temkin on Amazon and the customer-centric blueprint

Bruce Temkin says that Bezos letter describes Amazon’s customer-centric blueprint.  Bruce picks up on Bezos strategy of making investments and sacrifices today (to benefit customers) knowing that some of these will pay of in the long term.  There is one particular paragraph from Bruce’s post that I share with you here as I say it goes to the heart of the customer-centric orientation (bolding is my work):

Bezos understands the value of Amazon’s most critical asset, customer loyalty, which I’ve defined as the willingness to consider, trust, and forgive. That focus is what put Amazon.com on the top of the retail sector in the 2013 Temkin Experience RatingsGreat leaders focus on building that customer loyalty asset with the knowledge that it will generate the best returns for all stakeholders in the long run.

My take on Jeff Bezos, Amazon and the customer-centric orientation

I say that the core of authentic customer-centricity is a relentless ongoing commitment to creating compelling value for customers. What does Jeff Bezos say?  Here is an extract from his 1997 letter (highlighting is my work):

From the beginning, our focus has been on offering our customers compelling value….. we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store, and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-ClickSM shopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. 

But we are not in 1997 and Amazon is now the gorilla of the online space not an upstart, a revolutionary.  So lets take a look at the present situation.  I say the real test of authentic customer-centricity is what you do when you have arrived, when you dominate the marketplace.  I have worked with many large successful organisations. Again and again I have seen these organisations ‘squeeze’ the customer and take ‘advantage’ of the customer’s trust or the customers weakness to maximise profits.  Has Amazon fallen into this trap?  Here are two paragraphs from the April 2013 letter:

When you pre-order something from Amazon, we guarantee you the lowest price offered by us between your order time and the end of the day of the release date…….. Most customers are too busy themselves to monitor the price of an item after they pre-order it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.

In 2012, AWS [Amazon Web Services] announced 159 new features and services……. AWS Trusted Advisor monitors customer configurations, compares them to known best practices, and then notifies customers where opportunities exist to improve performance, enhance security, or save money. Yes, we are actively telling customers they’re paying us more than they need to. In the last 90 days, customers have saved millions of dollars through Trusted Advisor, and the service is only getting started. All of this progress comes in the context of AWS being the widely recognized leader in its area – a situation where you might worry that external motivation could fail. On the other hand, internal motivation – the drive to get the customer to say “Wow” – keeps the pace of innovation fast.

Why has Amazon bucked the trend here?  Why is Amazon not exploiting its dominant position?  Why is Amazon not extracting value from its customer relationships to maximise short-term profits and drive up the share price?

My answer is that Bezos is not playing the profit maximisation game.  I say that he is playing “maximise service not profits” game and as such he has built a culture and management doctrine that drives the appropriate thinking and behaviour.  Here’s what Jeff Bezos say in his l2013 letter:

One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

I say there is value in simplicity. I say that there is value in exceeding customer expectations. I say that one of the best ways of exceeding customer expectations is to give customers more than they expect. I say that customers expect companies to play dirty and take advantage. I say a sure route to delighting customers is not to do this and instead treat people right.  What does Jeff Bezos say?

To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.

In amidst all this content it is easy to miss what really matters: the context.  So let’s just take a look at the context.  Between the 1997 letter and the 2013 letter, a span of 15+ years, there has been consistency:

  • Leadership: Jeff Bezos continues to be in charge
  • Focus: creating compelling value for customers
  • Strategy: take calculated risks, innovate, invest today to create value for customers and look for payoff in terms of customer loyalty and market leadership in the longer run
  • Management doctrine: the fundamental pillars of the management doctrine are set-out in the 1997 letter.
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