In this post I wish to respond to the assertions made by Sampson Lee in Customer-Centricity Is Not The Solution; Its The Problem. If I understand it Sampson is asserting that pursuing the path of customer-centricity is the road to ruin and his logic is as follows:
- To the customer, customer-centricity is ‘listening to me and satisfying my needs‘;
- Yet, it simply is not possible, due to limited resources, to satisfy the needs of all customers especially as different customers have different needs;
- Simple customer needs have already been met and meeting the needs of savvy ‘mature’ customers in developed markets is too costly; and
- Even if you manage to satisfy all the needs of all of your customers you are playing the same game as every other company and so you will end up being like everyone else – a commodity.
It occurs to me that Sampson has come up with a definition that suits his argument: he has collapsed responding to any customer’s requests/demands with being customer-centric. His assumption is customer-centricity = saying yes to whatever any customer wants. Is this the correct way to think about / orient oneself toward customer-centricity?
As a strategist, I say being customer-centric involves saying “No” as much as it involves saying “YES”, it involves doing some stuff excellently and other stuff not at all or badly. Customer-centricity approached strategically involves thinking and then making choices. Here are some of the most important choices:
- which people are we seeking as customers and importantly which people do we NOT want as customers;
- which jobs will we do for these customers and which jobs will we NOT do for these customers; and
- which needs/preferences will we fulfill with these jobs and which needs/preferences will we NOT fulfill.
This need to think strategically and make integrated design choices has been explored by Frances Frei and Anne Morriss in their book Uncommon Service. They label it “Truth Number 1: You Can’t Be Good at Everything”. The point that the authors are making is that a company can do well by being clear on the value proposition and then making a series of carefully chosen and carefully integrated trade-offs. Trade-offs are carefully considered choices: being great at the attributes that really matter to the chosen customers and being poor at that attributes that don’t matter.
Let’s make this real through the example of the Commerce Bank created by Vernon Hill. According to the authors:
- Hill focussed on those customers who were fed up with the service experience of a traditional bank especially the hours and the attitude.
- Commerce Bank chose to stay open 7 days a week. Monday through to Friday the bank was open from 7:30 am to 8:00 pm. And full service banking was available on Saturdays and Sundays thus earning Commerce Bank tagline of America’s most convenient bank.
- This kind of service is expensive and to pull it off Commerce Bank choose to pay the lowest rates on deposits in every market that the bank operated. Notice, that these go together: the great/convenient opening hours were made possible through the low deposit rates. How was the bank able to make this choice? Because it knew that its target customers were willing to sacrifice the deposit rate for convenience of opening hours and good service.
- Commerce Bank also made the choice to be the best at serving customers, interacting with customers. The bank found that hiring employees who are best in class in both attitude and competence is expensive. And expense it could not afford given its business model. So, Commerce Bank chose to hire employees with the right attitude – the people who naturally had the disposition and interpersonal skills to deliver great service.
- Yet hiring people with great attitude but limited technical skills has consequences. These people were not in a position to understand/explain the differences between 27 varieties of checking accounts, much less explain any complex financial products. To accommodate this design choice – hiring people with attitude but not aptitude – Commerce Bank simplified its product line into one product: a checking account.
To sum up: Commerce Bank become a great success by focussing on customers who valued opening hours/great service and were willing to sacrifice deposit rates. To deliver this value proposition Commerce Bank had to make integrated design choices. They choose to excel at what really mattered to these target customers (convenience, great service/attitude) and chose to do badly on the dimensions that did not matter to the target customers: price (deposit rates) and product range.
Can customer-centricity lead you to ruin as Sampson Lee claims? No, if you approach customer-centricity strategically and take the kind of approach that Commerce Bank took, or Amazon does, or SouthWest Airlines does, or John Lewis does. Yes, if you go about it the way that Sampson suggests you are going to go about it: do whatever your competitors is doing, follow the latest shiny object, or simply respond to whatever is the latest whim of any person that chooses to do business with you.
Corephone: a great example of the service ethos, customer experience and customer centricity! (Part I)
If your smartphone or iPad needs fixing then contact Spencer at corePhone
It is rare that I come across a person, a company, a business that has cracked the customer-centricity code. It looks like Spencer and corePhone have done just that. All you have to do is to take a look at the website (the entire design of it) and read the testimonials to get that Spencer / corePhone is a world apart when it comes to the customer experience they generate and the delight they engender in customers. So if you have a broken smartphone or iPad then you should contact Spencer at corePhone (www.corephone.co.uk).
Have you noticed that smartphones have a design flaw?
Smartphones are easy to use & useful so they are heavily used. In the process of using them we drop them and that is when we find out that smartphones have a serious design flaw: they are fragile, they don’t bounce. Have you dropped your smartphone? What thoughts/feelings did you experience? I dropped my iPhone 4 and was shocked to find that the expensive case ‘fell apart’. Yet, thankfully, it did that when it hit the ground and so my iPhone was ok. I let out a sigh of relief as I was not looking forward to paying £400+ to get a new one. Some of us are not that lucky. Recently one of my colleagues dropped his iPhone, allow me to tell you his story using his words:
“We’ve all either seen it happen or had it happen to us…shiny iPhone one minute, a moment of clumsiness / butter fingers and the next minute it looks like this…
This is what happened to me today. I have no idea how it happened but I saw it all take place in slow motion and I was left cursing …. To make matters worse, my iPhone did have a bumper on it but as happens when you drop a piece of buttered toast on the floor, my iPhone landed face down……. I couldn’t even answer the phone when it rang as the cracked screen had affected it ‘touch screen ability’!….
Luckily sense prevailed and I left the screw drivers and claw hammer in the draw and Googled ‘iphone 4 cracked screen and Portsmouth’…..and bingo!! I came across a helpful chap called Spencer.
A quick phone call later he gave me his address and instructions to be there at 6:30pm (no earlier please as he has his tea at 6pm !). By 6:45pm I skipped out his front door £60 lighter but with what was effectively a new looking iPhone. All fixed, cleaned and shiny !
…… If you find yourself in a similar situation I cannot recommend Spencer enough. Whilst he’s an air traffic controller by day, he’s running a handy side line fixing iPads, Blackberrys, Nintendo’s, Camera’s, laptop screens etc.. by night. A link to his site is below…probably worth book marking! As I live local to him I’d be happy to hand deliver your broken item to him should you want me too! Core Phone “
Let’s take a closer look at Spencer / Corephone: testimonials to die for!
It is not often that I read that kind of review, that kind of delight, that kind of enthusiasm, that kind of advocacy. So I took a look at the CorePhone website to see if my colleague’s experience was exceptional. It is not. I was totally blown away by the testimonials - specifically the way that Spencer is treating his customers, how he is making them feel and the impact he is having on their lives. Here are a selection of testimonials (I have highlighted what speaks to me by ‘bolding’):
“I cannot start without saying how amazing this company is! My iPhone was smashed front and back and my home button was faulty after dropping the phone. Spencer replied quickly to my request of a repair and he offered me a next day service. In addition, he offered an amazing price for all jobs. When the repair was conducted, it was an amazing job, the phone looked brand new and Spencer even cleaned my earpiece and other ports out of courtesy. And even more amazing, it was fixed in 20 minutes! I would definitely use this service again and would recommend all to use corePhone for any iPhone repairs as the service you will receive is first class. Gary Coldwell, Hampshire, March 2012“
“Many thanks Spencer. It is nice to find such a genuine guy who could repair my iPhone. I texted Spencer to see if he could repair my iPhone. He texted me back and booked for the repair to be done Monday night. I waited for the repair to be done and could not believe how fiddly it was, but it was soon all put back together and looks like a new phone. Phone this guy; you cannot go wrong. John Tucker, Titchfield, September 2011“
“I would like everyone to know what a fantastic service spencer(corePhone) extended to me. I texted spencer at 7:40 am on Saturday and he replied straight away. I asked if he would take a look at my I phone 3G home button as it hadn’t worked properly for a while. He allowed me to come to his home at 8am and had my phone all fixed and ready to go by 8:15am !! Nice, friendly, quick & professional service is worth every penny,especially at Spencer’s fair rates. I recommend this service 100 %. Jim, Pickfords Segensworth, January 2011“
What can we learn from Spencer / corePhone?
The testimonials show that Spencer / corePhone create superior value for people who have damaged their smartphones. Let’s take a closer look at this superior value.
The central insight that corePhone is built upon is the understanding that customers are attached to their smartphones. Smartphones break – especially the screens. Getting these screens replaced through the high street retailers is both time consuming (long delays) and expensive. Customers want a fast turnaround and more affordable repairs.
The value proposition is what converts people with a problem into customers who reach out to you and buy from you. So what is corePhone’s value proposition? According to the website, “affordable iPhone repairs”. Read through the testimonials and you will find that this is a compelling value proposition. Customer after customers speaks about the fairness, the reasonableness, the affordability of the repairs when compared to Apple and other high street retailers.
The Customer Experience
It is the Customer Experience that generates delight, indifference, disappointment and/or anger. It is the Customer Experience that generates advocacy, word our mouth recommendations, customer loyalty and repeat business. Why? Because this is where you keep or break the bargain that you struck with the customer through your value proposition. This is the area that Spencer / corePhone excel in.
If you reach out to Spencer / corePhone then Spencer responds quickly even on a Saturday morning at 7:40am or Sunday when he is out shopping. And Spencer fixes your iPhone quickly – one customer rang at 7:40 am Saturday, was at Spencer’s workshop at 8am (that day) and left delighted at 8:15. That is the next clue: Spencer fixes your iPhone quickly – seems to be between 15 minutes and a half-hour. Furthermore, by the time the iPhone is handed to you it looks new, perfect. Finally, it looks like Spencer does more than he has to (‘”cleaning out ear pieces and ports..”) and treats his customers well – his customers like him as a person not just as a professional.
In short, the Customer Experience exceeds the value proposition. The value proposition only talks about affordability and sets that expectation. The Customer Experience delivers that extra: responsiveness, speed of turnaround, the intimate contact – being with /watching Spencer fix your iPhone in front of your eyes! What must it be like to see a master craftsmen open up your iPhone before your eyes and convert it from a wreck to a work of beauty? And how many of us want to take a look inside our iPhone and see how it is put together? This is all included in the Customer Experience!
Have you noticed that corePhone doesn’t have a loyalty or social media program to generate advocacy?
At a recent CMO dinner I asserted that companies that create superior value for customers through compelling value proposition/s and delightful customer experience do not have to pay the tax of customer loyalty. Show me a company that has a loyalty program and I will show you a company that is selling ‘me too’ products, services, solutions. Please notice that corePhone is not having to go out and bribe customers with customer loyalty and social gimmicks. Why? Because it is a strong value proposition and it delivers an amazing (wow!!) customer experience.
Part II coming next
Enough for today, in the next post I will take a look at the corePhone website, extract and share with you the lessons for building a website that works for customers. Very few websites do that especially if they belong to a big company!
Whenever I struggled with a Physics problem my professor (a wise man) instructed me to go back to the fundamentals: the fundamental principles of Physics. This post is written in that spirit.
A little about the value and limits of frameworks
So you want to lead your organisation to competitive success. Great. Without a framework – a point of view that you CREATE and IMPOSE on the messiness of reality – how are you going to get there?
Here is the framework that I use based on everything I have learned about business and customer-centricty – looking through the lens of the strategist rather than an expert in operational effectiveness/efficiency. Before you read what I write, I am compelled to point out that everything that I share with you is NOT the truth. It can NEVER be the TRUTH. Why? When you dive into it, really dive into depths, you will see for yourself that ultimately life is a mystery.
Frameworks are simply models. Models are not an accurate depiction/representation of reality (what is so). Models are useful because they simplify reality and thus allow us to act on it. Frameworks are filters – they filter out that which is unnecessary. The issue is that we can never know what is unnecessary. The hidden manifests that which is visible. If that is too esoteric, too zen for you then think about the fundamental finding of chaos theory: a infinitesimal change somewhere in the system (far far away in space-time) can have catastrophic impact over here now. The popular version for this is the “butterfly flapping its wings in South America yesterday can change the weather over here in the USA/Europe today”. OK, with the context set let me share with you that which I promised to share with you.
This is everything that I have learned about business, customer-centricity and customer experience – as a strategist
- He who does the best job of creating AND communicating the most value for the customer (through the customer’s eyes) wins;
- A distinctive Value Proposition (that speaks to the target market) is at the heart of creating value for the customer – notice I used the term DISTINCTIVE, not better and not simply different;
- That distinctive Value Proposition allows you to offer and get away with a ‘not so great customer experience’. Yes it does! Think about IKEA. Think about Ryanair/Easyjet. Think about early adopters of any new technology who put up with all kinds of ‘hassle’ simply to access and benefit from the Value Proposition.
- If you do NOT have a distinctive Value Proposition you can focus on excelling at the Customer Experience and that excellence can become your Value Proposition.
- Even if you have a distinctive Value Proposition you must continually improve the Customer Experience such that it AMPLIFIES your Value Proposition.
- A distinctive Value Proposition and the appropriate Customer Experience - both pinned by the Value Chain and a continuous improvement culture - will allow you to dominate your industry and make bumper profits.
To create and deliver that Value Proposition and the associated Customer Experience you have to get your hands dirty designing, monitoring, changing, tuning the Value Chain - what you do not do (e.g. Zappos does not outsource Customer Service) matters as much as what you do.
Create a context where you and your people are open to generating and using insights (wherever they arise) to improve your Value Chain, the Customer Experience – think twice before you make any significant change to the Value Proposition.
Communication (listening, talking, discussing, imagining, sharing, debating) matters profoundly so communicate, communicate, communicate - if a tree falls down in the forest and there is no-one to record and share that falling then that tree did not fall, in fact it never existed!
One day a butterfly will flap its wings, change the ‘environment and the rules of the game’ rendering your Value Proposition irrelevant. When that happens your customer-centricity, your Customer Experience – no matter how great – will not save you. If you are ‘lucky’ you may end up reinventing yourself – like Apple, like IBM, like Starbucks did. The more likely scenario is that you will die a slow death like Kodak. No need to despair, the game goes on, just the player/s at the centre of the stage change. Comfort yourself, know that we are all like guests in hotel rooms – temporary occupants in the game of business and life, the game goes on with and without us. Ultimately it is all about the game itself – we come on the stage, play our part and then leave. That applies to all of us – no exceptions. That is our shared humanity.
I thank you for listening, it is your listening that makes my speaking possible. I wish you the very best in the game of business and in the game of life. It’s just a game – don’t take yourself so damn seriously AND play the game full out. Do not be like the old lady who died ‘clutching’ a note that read:
Never fulfilled my potential
NEVER fulfilled my potential
Make your life count, make your role count, make your team count, make your organisation count. Make an awesome contribution – at least play the game of making an awesome contribution full out. It is when you are standing in the clearing called ‘up for / committed to making an awesome contribution’ that you are most likely to come up with the Value Proposition (that makes a contribution to the lives of our fellow human beings) and the associated organisation that creates and delivers that Value Proposition.
“All too much of what is put forward as strategy is not. The basic problem is confusion between strategy and strategic goals.” Richard Rumelt
So much talk about strategy and so little understanding of what it is, what it involves, and the difference between a good strategy and a bad strategy. You can call me a little touchy (or a lot touchy) when it comes to strategy and strategy making. I encountered strategy only after being heavily involved in the operational stuff – getting my hands dirty making the ‘trains run on time’. Being new to strategy I made the time and put in the effort (lots of it) to study strategy and strategy making. I do wish more people would do the same then we would not have tons of rubbish being written on strategy by people. Yes, this paragraph is a rant. Now lets move forward and doing something constructive: learn the difference between good strategy and bad strategy. If you don’t care then I suggest you stop reading right now.
What Paul Hagen of Forrester says on strategy
As you might have noticed (if you follow me on Twitter) I make time to keep up with the domains that impact the Customer. During the course of this process I came across a post on the 1to1 Blog by Paul Hagen (“principal analyst, Forrester Research, serving Customer Experience professionals”). Step 2 – Define key of a strategy – got my interest, here it is:
“2) Define key elements of a strategy. There are many different kinds of experiences that companies can deliver…all of which are valid. Witness USAA and Costco, both of which score high marks on Forrester’s Customer Experience Index. A strategy should provide a vision for the kind of experience to deliver, derived from a core value proposition inherent in a company strategy and key attributes of the brand promise that are most meaningful to customers. This “intended experience” should provide guidance about the kinds of activities the company can start (and stop) doing to achieve the end-state. The strategy also needs to articulate the company’s aim for how good the experience should be…does the firm seek to be the best in its own industry or across all industries, or is it merely trying to maintain parity with other firms? This will guide the kind of resources that the firm may need to dedicate to reaching this objective.“
Design the Customer Experience to be in alignment with the Value Proposition
I am in total agreement with the first sentence of Paul’s statement. What he is saying is that there is no such thing as a homogenous customer experience. The customer experience that you design and deliver has to be in alignment with the value proposition that you have communicated to your customers. This is why, in the model below which I developed and use, the Value Proposition feeds into the Customer Experience; the third pillar is Customer Insight – it feeds the creation/refinement of the Value Proposition and the Customer Experience.
The sequence goes like this. Generate insight into customers (Customer Insight). Use this insight to craft a Value Proposition that a customer/market segment finds attractive enough to sign-up for. And deliver a Customer Experience that is in alignment with the promise (implicit, explicit) made through the Value Proposition. Do that and you have happy, even delighted, customers – which is why both USAA and CostCo can score high marks even though the Value Propositions and associated Customer Experience is radically different.
So far Paul and I are in agreement.
Does anyone understand what a real strategy is?
Then he goes on and ruins it for me:
He writes “A strategy should provide a vision for the kind of experience to deliver, derived from a core value proposition inherent in a company strategy and key attributes of the brand promise that are most meaningful to customers……” Hello, anyone at home? A vision is a vision – it is picture of the ‘future’ that you want to bring about. So, I might have a vision of living in Rio and spending my days surrounded by Brazilian beauties, soaking up the sunshine, waited hand and foot, swimming in clear blue waters…. A vision is not a strategy and a strategy does not include a vision.
He continues with “The strategy also needs to articulate the company’s aim for how good the experience should be…does the firm seek to be the best in its own industry or across all industries, or is it merely trying to maintain parity with other firms? This will guide the kind of resources that the firm may need to dedicate to reaching this objective.” Now that sounds awfully like objective setting to me. Maybe I am a little simple and being simple, in my world objectives are objectives and they in turn drive the formulation of the strategy. Continuing with my analogy, if my objective is to be waited hand and foot on the beautiful beaches of Rio, all my needs catered for, then I have to formulate a strategy that allows me to get hold of the money/power that I need to realise my objective. Notice that the objective comes first.
Continuing with my Brazilian (Rio) analogy, let me ask the question: “Why do I need a strategy?” Perhaps the challenge is that I live in the UK, I am penniless and I do not have a passport. Now if that is so then I need a strategy that addresses these challenges – the challenges that prevent me from being in Rio surrounded by Brazilian beauties and being waited on hand and foot. Let’s continue and explore this further.
What are we talking about when we talk about strategy?
The issue at hand is that ‘strategy’ has becoming a meaningless phrase bandied about by all of us (including myself) to mean anything that we want it to mean. In my simplest way of thinking, one needs a strategy in order to outwit intelligent opponents and/or address an important challenge which if not faced ‘promises’ an exit from the game of business. Does that sound like Kodak to you? Which is why monopolists who control valuable resources, that people cannot easily do without, do not need to formulate a strategy: they just have to make sure that they continue to be the monopoly supplier.
The components that feed into and drive the strategy making process include: Challenge (the pain that requires a strategy to be developed); Vision (the future state that you wish to create / bring about); Objectives (the specific, measurable, outcomes that you want); Resources (what resources are ready at hand); and Constraints (these can take many forms political, legal, technological, values that cannot be sacrificed….). If you want a deeper understanding of strategy and strategy making then read this post.
What are the hallmarks of a bad strategy?
Richard Rumelt has written one of the best books (Good Strategy Bad Strategy) I have read on strategy (and I have ready many of them). He says that there are 4 hallmarks that we can look out for when detect a bad strategy. Can you guess what they are? Here are the 4 the hallmarks:
Fluff/ Fluff is gibberish that masquerades as strategic concepts and arguments . It uses “Sunday” words (words that are abstruse / inflated) and esoteric (I call them ambiguous, unnecessarily complex) concepts that create the illusion of high-level thinking.
Failure to face the challenge. Bad strategy fails to recognise and clearly set-out the challenge. Richard points out that if you fail to clearly set-out the challenge (in concrete terms) one cannot evaluate a strategy or improve it.
Mistaking goals for strategy. Richard says that many strategies are just statements of desire (the vision) rather than plans for overcoming obstacles and addressing the challenge.
Bad strategic objectives. Strategic objectives are bad when they fail to address critical issues or when they are impracticable.
I will go into these in more detail in forthcoming posts. In the meantime I wish to leave you with the following statement by Richard Rumelt which, in my view, goes to the heart of the matter: “All too much of what is put forward as strategy is not. The basic problem is confusion between strategy and strategic goals.” Do you think Paul Hagen has fallen into the same trap?
How much do you really know about your customers?
If you are going to create superior value for your customers through the Value Proposition and the associated Customer Experience then you need to have sound insight into the lives of your customers. Which is why in my model Customer Insight, Value Proposition and Customer Experience are interlinked.
How much do you really know about your customer? Allow me to be more specific – how much time, effort and emotional investment have you made into stepping into and living the lives of your customers? Have you even spent a day walking in their shoes seeing what they see, hearing what they hear, experiencing what they experience and possibly thinking and feeling what they feel? What kind of insight would be available if you were to step into the customer’s shoes and live their life for a week? Who in your organisation had done that even once?
Word are easy, deeds are harder. My experience is that few organisations truly understand their customers because it is still rare for people within the organisation to walk in the shoes of their customers and experience the world through the minds and bodies of their customers. Yet, this is exactly what is needed if you are to come up with both the insight and the emotion around that insight that inspires you to make the changes that will create value for your customers.
Shifting from an organisation-centric mindset to a customer-centric mindset
The more I dive into Customer Experience and Customer-Centricity the more convinced I become that what we are really taking about is business model innovation (including leadership, culture, mission & strategy) – the outer ring of my Create Superior Value framework (the first diagram in this post). As such I wish to share with you a table that I adapted from Osterwalder & Pigneur’s book:
Shifting from a company-centric to a customer-centric mindset can be remarkably difficult – most people live and breathe the organisation so their natural, taken for granted, way of being, seeing and doing is company centric.
Only those people who have a strong enough reason (competitive forces) or a strong desire will step into the customer shoes and by doing so they will shift their perspective from company-centric to customer-centric. Therein lies the opportunity: to come up with novel insights that are simply not available to those looking at customers from afar with industry/company coloured telescope.
What do you think?