A ‘Fresh’ Look At Customer Retention and Loyalty (Part I)

It isn’t just Donald Trump that mixes tidbits of fact with much fiction to appeal to those eager to believe. This is also the case when it comes to the business world. Especially so when we get to customer-centricity, customer experience, customer loyalty….. Whilst some folks can tell that Trump is talking nonsense, in the Customer arena it is that much harder to separate fact from fiction, and useful advice from nonsense.  So, today, let’s take a fresh look at customer retention and loyalty.

What Is The Central Assertion of Customer Loyalty?

No, I am not talking about the often mentioned statistic that goes along the lines of “A 5% increase in the customer retention rate can increase business profits by 25% to 125%.” That is just greed that has driven many to go for customer loyalty without a deeper appreciation of what is involved in generating this kind of financial outcome.

I am inviting you to do something that is rather extraordinary in these times: look beyond the surface, go deeper, and think.  What lies behind this statistic?  Consider that the central assertion is something along this line:

“…doing business with people you trust and understand is more predictable and efficient, and thus more profitable than doing business with uninvested strangers.”

Where Do Employees Fit Into The Picture?

As I understand it, Wittgenstein pointed out that a lot of nonsense is spoken due to language itself. One of the major defects is our habit of speaking-thinking in terms of either/or.  Another defect is simplistic cause-effect thinking which looks for only one major cause for any effect. Which might explain why there is so much opinion offered on where employees fit into the Customer Loyalty picture. Some say employees come first. Some say customers come first, employees second. Others ‘say’ employees aren’t all that important just one factor amongst many. Where do you stand?

Listen to this:

“…we could not progress beyond a superficial treatment of customer loyalty without delving into employee loyalty.….. there was a cause-and-effect relationship between the two; that it was impossible to maintain a loyal customer base without a base of loyal employees; and that the best employees work for companies that deliver the kind of superior value that builds customer loyalty…. our concern with employee loyalty entangled us in the thorny issue of investor loyalty, because it is hard to earn the loyalty of employees if the owners of the business are short-sighted and unreliable….. investor loyalty was dependent on customer and employee loyalty, and we understood that we are dealing not with tactical issues but with a strategic system.”

I also invite you to consider that just about every organisation that has jumped on the Customer bandwagon has done so tactically, not strategically.  And almost all the advice on Customer, that I came across, is tactical – which is to say it is centred on tactics even if these are given strategic clothing.  Which is to say that these folks have taken a superficial approach to loyalty.  Still wondering why most if not almost all large organisations have failed to make a meaningful dent in customer or employee loyalty?

Should Marketing Own Customer Retention and Drive Customer Loyalty?

Who should be responsible for cultivating customer loyalty? Who should be keeping a firm eye on customer retention?  Should it be the marketing function as many who serve the marketing function argue?  What is your stand on this?  Now listen to this:

Loyalty has implications that extend to every corner of every business system..… Tempting as it may be to delegate customer retention to marketing, what can marketing do to stem the outflow of employees and investors?  Retention is not simply one more operating statistic, it is the central gauge that integrates all the dimensions of a business..”

Ok, so the marketing function is not in a position to the do the job.  So, should you go out and hire yourself a Chief Customer Officer?  You know someone who sits in the staff function with little authority over the line functions of marketing, sales, service, logistics, finance…?  Will that do it?  Listen to this:

“..customer loyalty is too important to delegate. It has a crucial effect on every constituency and aspect of a business system….The responsibility for customer retention or defection belongs squarely on the CEO’s desk, where it can get the same kind of attention that is lavished on stock price and cash flow.”

Enough for today. Let’s continue the conversation another time and look into what it actually takes to cultivate loyalty and generate the kind of increase in customer retention that results in superior growth, profits, and cashflow.  In the meantime I thank you for your listening and I wish you great living.

 

 

 

 

Against Slavery to Ideology & Method

The older I get the more I notice that the autonomy and the intelligence of folks in large organisations is put at the service of some ideology and/or method that has taken root in the heart-mind of someone higher up in the organisation.  Typically, this happens when that particular ideology (e.g. “customer-centricity”) and/or method (e.g. “Agile”) has planted itself in the wider business world.

What’s the impact?  Allow me to convey the impact through the following assertion made by Jean-Jacques Rousseau:

“Man is born free and everywhere he is in chains.”

What tends to show up when folks in organisation are ‘in chains’ to some doctrine/method?  This is what I have observed: Stupidity, game playing, and a decrease in effectiveness.

Adherence to the doctrine/method surpasses reasoning hence folks end up doing stuff which they know does not make sense.  To get things done it is often necessary to bypass-bend the doctrine/method.  Therein starts the game playing – making it look like the doctrine/method is being followed when it is not.  The overall impact is a decrease in effectiveness. By effectiveness I mean both outcomes and the workability/capability that generates the  outcomes.

New ideology, method, toolset is introduced with great fanfare. Yet with little understanding: know-how as well as know-what and know-about.  Given sufficient time performance declines.  The Tops and Middles blame the people.  Clearly given the God given status of the ideology/method/toolset the people have to be at fault.  They are not following the method.  I have yet to see the suitability of the method/tool being seriously questioned.  As a result, adherence to doctrine/method is tightened rather than relaxed.  This further degrades the workability/capability of the organisation.  I refer to this as layering stupidity on stupidity.

What is an intelligent way to go about leading-managing an organisation?  Forget doctrine / ideology. Forget method.  Forget blind obedience to anything. Instead focus on calling forth the collective intelligence of your people AND enhancing the workability of your organisation. Let me put this simply: take a zen stance, let fall all fixed thinking (ideology, doctrine, methods, tools..), go to where the action is occurring, and look – really look. Then select the right course of action / method / tool. Once the method/tool has served its purpose, drop it! Like the canoes, when you have used it to cross the river, leave it there at the side of the bank.

Allow me to end this conversation by sharing this story with you:

When the bishop’s ship stopped at a remote island for the day, he determined to use the time as profitably as possible. He strolled along the seashore and came across three fishermen mending their nets. In pidgin English they explained that centuries before they had been Christianised by missionaries. “We Christian!” they said, proudly pointing to one another. The bishop was impressed. Did they know the Lord’s Prayer? They had never heard of it. The bishop was shocked.

“What do you say, then, when you pray?”

“We lift our eyes to heaven. We pray, ‘We are three, you are three, have mercy on us.”

The bishop was appalled at the primitive, the downright heretical nature of their prayer. So he spent the whole day teaching them the Lord’s Prayer. The fisherman were poor learners, but they gave it all they had and before the bishop sailed away the next day he had the satisfaction of hearing them go through the whole formula without a fault.

Months later, the bishop’s ship happened to pass those islands again, and the bishop, as he paced the deck saying his evening prayers, recalled with pleasure the three men on that distant island who were now able to pay, thanks to his patient efforts. While he was lost in that thought, he happened to look up and noticed a spot of light in the east. The light kept approaching the ship, and the bishop gazed in wonder he saw three figures walking on the water. The captain stopped the ship, and everyone leaned over the rails to see this sight.

When they were within speaking distance, the bishop recognised his three friends, the fishermen. “Bishop!” they exclaimed. “We hear your boat go past island and came hurry hurry meet you.”

“What is it you want?” asked the awe-stricken bishop.

“Bishop,” they said, “we so, so sorry. We forget lovely prayer. We say, ‘Our Father in heaven, holy be your name, your kingdom come…’ then we forget. Please tell us prayer again.”

The bishop felt humbled. “Go back to your homes, my friends,” he said, “and each time you pray say, ‘We are three, you are three, have mercy on us!”

Summing up: Many, many, many leaders/managers can do with keeping this story in mind, putting aside the arrogance that goes with their elevated roles, and adopting the pragmatic humility of the bishop.  Focus on workability and use whatever method/tool is appropriate. Do not make a God of a specific doctrine, method, tool.  If you are going to make a God out of anything, then make a God out of your people – their potential to do amazing work and create amazing works.

Enough for today. I thank you for your listening and wish you great living. Until the next time….

 

Beyond Listening to The Voice of The Customer / Employee

Customer gurus and technology companies push the need for the company to listen to the voice of the customer. Many companies, especially large companies, buy what they are selling. Indeed, it makes sense: listen to the voice of the customer through some manner of surveying customers seems complimentary to conducting regular market research.

HR gurus and technology companies push the need for the company to listen to the voice of the employee. In the service of this sale frightening soundbites are put forward about the state of employee engagement – disengagement is rife and getting worse. What happens, organisations set up once a year surveys of their employees in order to listen to their employees.  Ok, some do it twice a year. Maybe, a handful do it quarterly.

Is this listening?  You may be convinced that this is listening. I do not find myself in agreement with you. I say that listening is a specific encounter between one human being and another human being or human beings.  I say that listening really takes something – it takes a dropping of the self to enter into and get the world of the other. I say that listening rarely occurs inside and outside the workplace – we simply do not have cultural practices that teach us to listen nor call us to listen.

For a moment, let’s assume that surveying customers and/or employees is listening to customers / employees. Is this listening complete?  Put differently, have your heard all that your customers / employees are saying?  Before you come to a definitive answer I consider the following:

When a man whose marriage was in trouble sought his advice, the Master said, “You must learn to listen to your wife.”

The man took this advice to heart and returned after a month to say that he had learned to listen to every word his wife was saying.

The Master smiled and replied, “Now go home and listen to every word she isn’t saying.”

Be with this for a moment. Doesn’t the profound truth of this hit you?  One can listen at many levels for the speaking is occurring at many levels AND to truly listen to another person it is necessary to listen to the speaking that is silent.

I invite you to consider the following:

  1. Listening to the voice of the customer and/or the voice of the employee through surveying is the pretence of listening. It is not listening.
  2. Even the best designed survey will not give you access to the speaking that is silent.
  3. Listening of the kind that really hears can only take place when you genuinely respect and care for the person you are listening to.  At a very minimum it requires a deep sense / feel of our shared humanity.
  4. The only real world evidence that listening has occurred is a change in the way that you/your organisation is in the world. By “is” I mean the way that one shows up and travels in the world: being-doing.
  5. Good strategists, leaders, managers, sales people, customer service folk have to be great at listening to the silent speaking.

I thank you for your listening and wish you a good day. Until the next time…

 

 

Mary: What Kind of a Difference Does Generosity Make?

IMG_MaryIf you want to attract customers then you must have something that pulls customers to you.  If you happen to be in the business of selling fine chocolates then good service is necessary but insufficient.

In the fine chocolate business the ‘product’ matters.  By ‘product’ I mean both the quality (taste) of each chocolate and the range of chocolates.  It is the ‘product’ that calls the customer and pulls him back to your business – your store.  I have witnessed folks put up with poor service just to get their hands on the ‘product’ at a competing brand.

So, it is the ‘product’ that Mary makes-sells that drew me the Mary store in the Royal Galleries (Brussels) last week. Yet, I am not writing this because of the ‘product’.

I am writing this as an expression of my sense of gratitude. Gratitude to whom?  Gratitude to the two fellow human beings (Olivier, Eda? ) who served me.  Language fails here: serve is not the right word.  Yes, they provided service. No, they did not merely serve me.

What is it that made such an impact on me?  Their way of being was professional yet human/warm/considerate. Clearly, they knew/cared about their ‘product’ (the chocolates). And, I was made to feel welcome.  Yet, this is not it. All this is necessary yet not sufficient.

What really made the difference?  Generosity.  Olivier offered me several chocolates to taste whilst he was putting the selection together.  Eda? offered me some chocolates whilst Olivier was working the cash till. Both of them were generous in dancing with the conversation that I initiated.

Lesson: If you wish to be granted a space in the hearts of your customers it is necessary to cultivate gratitude in the hearts of your customers. A great way to cultivate this gratitude is through generosity in your way of showing up and travelling in this world. Reciprocity ensures that most of us, most of the time, remember and repay our debts.  The catch here is that the generosity must be genuine and not a technique for getting the better of your customers.

It occurs to me that the real measure of customer-centricity is generosity.  Which is why so many large organisations struggle with the Customer thing.  Interestingly, I have found Amazon to be the exception as I have experienced acts of generosity from Amazon. Each time those acts have left me feeling delighted.

 

 

 

 

Beware The ‘Customer-Centric’ Enterprise!

It’s evening time, work is finished for the day, and I am taking a stroll.

Across my path I notice a man in his thirties. He smiles.  He starts speaking to me. I reply. He notices that I am a foreigner in this land. He says “English?”, I say “Yes”. He asks where I am from. I tell him. Then he says he likes English football.

I am listening – listening with a view to understand what he is talking about. Then he moves closer into me and starts ‘tackling’ me – the “English tackle” he says. He says something about the World Cup…. I stand there puzzled – why is this fellow up close and personal with me? I didn’t give him my permission.

Right at that moment this feeling hits me: “Somethings not right!”. Automatically, I reach for my back pocket where I keep my wallet.  What do I find?  I find his hand there on my back pocket: he is in the midst of stealing my wallet.

I find myself hit with a wave of disgust. Why? It hits me that it has all been a charade – an effort to distract and deceive me long enough for him to pick my pocket and walk away with my wallet.

A little later it occurs to me that this is true for the whole customer-centric thing.  What do I mean by that?  I mean that when you strip away the fine sounding words, the whole Customer thing – as lived by just about every large business I have come in contact with – comes down to this:

  • Working out which customers have the biggest wallets;
  • Striving to understand the motivations, inclinations, behaviours and weaknesses of customers; and
  • Using this insight to craft-execute ‘strategies’ to attract/engage/seduce the customer long enough to walk away with his wallet without alerting the customer to what is really going on.

So, my advice to you as a customer is be wary of the customer-centric enterprise. Why?  The odds are it is a pickpocket in disguise.  Instead go for the enterprise that has a reputation for great products (e.g. Apple). Or a reputation for great service (e.g. Amazon). Ideally, one that has a reputation for a great products and great service (e.g. John Lewis).

 

 

A Personal Reflection On Change

What is change really about? Why is it that at times folks fight against change and other times folks embrace change?  What is going on here?  Allow me to give you my take by sharing my story with you.

At 9:34am 16th March 2016 I arrived at the Accident & Emergency wing of the Royal Berkshire Hospital. At the end of the day the surgical staff operated on my lower back for three hours. Why? Cauda equina!

Some 10 years ago I started experiencing considerable back pain. The kind of back pain where I could not move. This pain got worse and worse. Eventually I consulted a neurosurgeon. His point of view? One day you will need spinal surgery. His advice? Make lifestyle changes, take painkillers when necessary, and put off surgery for as long as you can so as to benefit from medical know how.

I followed the advice. In the process I gave up almost all of the activities that left me feeling alive: trekking in the mountains, tennis, badminton, cycling, visiting far away places… Eventually I even gave up playing table-tennis.  Please get a sense of my loss: my favourite holidays were those in far away places usually with some trekking in the mountains; my favourite spring/summer sport is tennis; my favourite winter sport is badminton; and I love playing table-tennis.

My wife sensing the loss of my world, and my self, encouraged me, again and again, to undergo surgery.  My mother-in-law  (French) even volunteered to take me to a French surgeon who specialised in spinal surgery.  I refused the surgery (whether in England or in France) and lived with pain.

Why did I refuse to undergo surgery for the last ten years? Was I scared of the operation? No. Was I concerned about all that I would need to do to recover post surgery? No.  Was I worried about the cost of the surgery? No. So why did I not undergo surgery?  Because, I was told that there was a 2 in 100 likelihood that I would be paralysed as a result of the surgery. For me there is no loss more devastating than this one.  This was not a loss I was willing to risk then nor today.

Why did I willing go to the Royal Berkshire Hospital on Wednesday 16th March 2016 and almost beg the surgeons to operate on me? What changed?  Before 16th March there was a 2 in 100 chance that I would be paralysed if I underwent the operation. On the 16th March there was something like a 98 out of 100 chance that I would be paralysed if I did not undergo the operation!

So what is my personal take on change?

1-Folks do not resist change. My 21 years old son quit a management position paying £24k to take a junior position paying £12k. Why? He was bored in his old job – he could do it in his sleep. His new job promises him that which matters to him at this stage of his life.

2-Folks resist loss – the loss of that which matters to them: identity, home, the familiar, social ties, possibilities, status, income, autonomy, choice, dignity.

3-Most organisational change calls forth resistance because folks have rightly worked out that the change involves them being stripped of things that matter to them so that their loss can be turned into gain for those in senior management.

4-Most change management practitioners are charlatans. I know more than one change management expert who cannot (even thought want to) cultivate meaningful / loving relationships with their spouses and/or children. Their knowledge of the dark arts vanishes where it matters the most – at home.

5-If you wish folks to embrace change then ensure that this change genuinely enriches their lives. And here I invite you to reflect back on my story. When the major back surgery showed up as enriching my living (rather than impoverishing it drastically) I willing embraced the surgery.  Now every day involves 3 hours of exercises that are not pleasant yet necessary.

Finally, I leave you with this thought on CX, innovation, and digital transformation: most folks in senior management positions have not really embraced any of these because these show up as risky – they involve loss! Better to talk the talk and continue tinkering (using proven methods) with business as usual to improve short-term earnings.

Book Review: The Endangered Customer by Richard. R. Shapiro

I enjoyed reading Richard Shapiro’s first book: The Welcomer’s Edge.  In this book Richard set out a 3 step model (the greet, the assist, the leave-behind) for making a human connection with customers through every customer interaction.

In his latest book – The Endangered Customer – Richard expands the 3 step model into eight steps in the customer’s journey from the initial encounter to making a repeat purchase. The book is relatively short (less than 150 pages), easy to read, and each of the eight chapters addresses one of the eight steps.

What Is The Endangered Customer About?  

It’s about retaining customers through superior service.  Superior service necessarily involves seeing customers as persons and striving to cultivate a human connection with them. Here’s how Richard puts it (bolding mine):

“Poor service followed by poor service – that’s how you endanger your customers into becoming someone else’s customers.”

Why bother going to the effort of generating good/great service?  After 28+ years spent working in the customer service industry, Richard makes the following assertion (bolding mine):

“.. companies of any size and in any consumer channel, can survive and thrive in the Switching Economy by making human connections that build sustainable customer relationships…..”

“As automated transactions become faster, easier, and more reliable, making human connection will become increasingly rare – and therefore increasingly more valuable. The greatest differentiator for any company will be how well it makes that human connection with its endangered customers.”

What Are the 8 Steps to Guarantee Repeat Business Through Human Connection?

In the Endangered Customer Richard sets out the 8 steps for cultivating human connection, delivering personalised service, and inviting-cultivating lasting relationships with customers.  These steps and associated nuggets of wisdom are:

1 – Make me feel welcome

“Human beings come to you with hope in their hearts. They need or want something they haven’t found elsewhere, and hope you have the answer…. Your job is to give them hope that they’ve come to a place where their problem or desire will be addressed in a helpful, friendly manner....”

“Offering hope beings with a welcoming smile.”

“The goal is not to create a relationship with every interaction. The goal is to invite a relationship…. This is why it’s important to faire the right people for customer-facing positions.”

2 – Give me your full attention

“Customers carve attention. They want and need to feel that you’re interested in them.”

“Fundamentally, giving your full attention requires an ability to acutely listen.”

“Joe Girard, the Guiness Book’s world record-holder for retail sales: “People may have had to wait for an appointment, but when I was with them, I was with them body and soul.

3 – Answer more than my question

“Questions are the customer’s way of inviting you to become a valuable guide in his or her journey. A sales associate accepts that invitation by taking the time to anticipate the “detours” and other obstacles that might lie ahead. That’s often the information that has the most profound effect on the customer. “

4 – Know your stuff

“There is no sales tool as powerful as knowledge. When we were shopping with Rochelle, we knew we were in good hands. Her expertise, coupled with a smile and an uplifting attitude, made all the difference.”

“… in a retail environment, I believe that the greatest cost of employee turnover is the one that is rarely quantified or even discussed: the diminished capacity in terms of customer relationships and institutional knowledge.”

5 – Don’t tell me no

“Never saying no is all about trying your best, because people will always come back to do business with a company that gives them the feeling that it is there for your.”

“…. many companies have standard practices that needlessly leave their customers feeling disappointed and uncared for.”

6 – Invite me to return

“The leave-behind represents any number of little things that associates can do and say to make customers want to visit again…. The point of every leave-behind is to make it easy for the customer to stay in touch.”

“When you are invited to return, it makes you feel wanted and accepted.”

“I can’t emphasise enough that feelings of loyalty naturally develop towards a person and not the business.”

“Relationships are cultivated on a person-to-person basis, not through impersonal automated “thank you” emails.”

7 – Show me I matter

“We are all innately suspicious of someone who seems to lose interest in us after money has changed hands. People just hate feeling seduced and abandoned. People like feeling important and special.”

“… demonstrating genuine concern and care after the conclusion of the interaction is something that many companies do not consider. When it does happen, it’s just an accident.”

“Take a good look at any company that is known for being “loved” …… You will discover that the company has instituted any number of consistent procedures and practices that assure customers of their importance….”

“Everything about the customer experience has to be genuine or it loses its punch.”

8 – Surprise me in good ways

“Customer satisfaction is a minimal standard; loyal customer relationships are built around surprise and delight. Customers crave human interactions that leave them with the experience of feeling special, and nothing conveys specialness better than surprise. “

 

The Heart of Customer Loyalty: Paying It Forward?

Richard has some interesting things to say when it comes to the implementation of the 8 steps, and the cultivating of long term relationships with customers.  Lets listen to his speaking:

“Of the eight steps…. the final three are perhaps the most difficult ones to implement because acknowledgement, appreciation, and delight have noting to so with closing sales and raising short-term revenues….”

Pay it forward is really the ultimate expression of customer service, because it’s a practice that puts people before profits….. A pay it forward culture …. will naturally reap dividends in terms of customer loyalty and repeat patronage because customers will naturally keep returning to anyone capable of giving them this feeling. And they in turn will tell their friends about you ….. as a way of paying it forward.”

Concluding Remarks

I enjoyed reading The Endangered Customer. I am clear that Richard Shapiro knows his subject matter – building enduring bonds with customers by cultivating the human connection between the customer-facing employees and the customers. I am also clear that Richard provides valuable advice if you have the listening for this advice.

My concern is that the very people who are in the position to effect change in organisations – especially big corporations – do not have the listening for that which Richard Shapiro speaks. The human connection seems antiquated in the age of worship at the altars of process and technology.

Please note that this review is necessarily biassed. To be human is to be biased – always and forever.  In my case, my bias is that I consider myself to be a friend of Richard R. Shapiro even though we have never met / nor talked.  Finally, I offer my thanks to Richard for sending me signed copy to read.

I thank you for listening and I wish you the very best. As the French say: until the next time….