A ‘Fresh’ Look at Customer Retention and Loyalty (Part II)

Let’s recap Part I of this conversation. The key points as I understand them are:

  • You cannot have customer loyalty without cultivating employee loyalty and investor loyalty. Why? Because they are fundamentally and inherently interconnected.  So debates about which comes first (customers, employees, investors) shows that folks lack a fundamental grasp of that which we are dealing with.
  • Customer retention-loyalty has implications that extend to every corner of the business. It is necessarily a strategic matter. As such the ownership-responsbility-accountability  belongs with CEO.  It cannot be handed off to the Marketing function (or any other function) nor given over to a Chief Customer Officer.
  • Retention is not just another metric. It is the defining metric for the whole business. Retention is used to integrate all aspects of the business into a coherent whole.

OK, now we are in a position to move forward and conclude this conversation. Allow me to set the scene by sharing this assertion with you (bolding mine):

“Stemming the customer exodus is not simply a matter of marketing; it demands a reconsideration of core strategy and operating principles.

I say that it demands a reconsideration of core strategy and operating principles in the context of a new theory of doing business.

What Theory of Business Enables Customer Retention and Loyalty?

Practice is always based on some theory of how the world works. The dominant theory that fuels just about every large business is one of profit maximisation and shareholder enrichment.  With this focus customers and employee are seen purely as means and almost never as ends in themselves.  Which is to say that they are viewed and treated as tools rather than human beings.  Human beings do not tend to be loyal to folks who treat them as tools.

If you are serious about generating sustainable improvements in customer retention and loyalty then you will need to jettison this theory and embrace a new theory of business. Why?  Lets listen – bolding mine:

The new theory sees the fundamental mission of a business not as profit, but as value creation. It sees profit as a vital consequence of value creation – a means rather than an end, a result as opposed to a purpose…

Profits alone are an unreliable measure because it is possible to raise reported short-term earnings by liquidating human capital. Pay cuts and price increases can boost earning, but they have a negative effect on employee and customer loyalty….  

…there are two kinds of profit. Call the first kind virtuous: it’s the result of creating value, sharing it, and building the assets of the business…. the other kind of profit is destructive. Destructive profit does not come from value creation and value sharing; it comes from exploiting assets, from selling off a business’s true balance sheet. This is the kind of profit that justifies terms like profiteering…..

When profit is a company’s goal and purpose, virtuous and destructive profits serve equally well. But once you see profits as a means to, and a consequence of, the sustained creation of value, then only virtuous profit will do.”

What Kind of Stand Do Those Who Excel in Customer Retention and Loyalty Take Toward People?

Which means that a customer retention and loyalty centred approach to doing business requires a particular way of seeing-treating people, and managing the business. Let’s listen – bolding mine:

“…see people as assets rather than expenses, and they expect these assets to pay returns over a period of many years. Loyalty leaders choose human assets carefully, then find ways to extend their productive lifetimes and increase their value. Indeed, loyalty leaders engineer all their business systems to make their human inventories permanent. They view asset defections as unacceptable value-destroying failures, and they work constantly to eradicate them. 

Why treat people (customers, employees, investors) in this manner? Because loyalty to count as loyalty has to be given willingly. Listen:

“You cannot control a human inventory, which of course has a mind of its own, so you must earn its loyalty. People will invest their time and money loyally if they believe that their contributions to your company will yield super returns over time. The secret is … to select these human beings carefully, then teach them to contribute and receive value from your business…”

Is Loyalty a One-Way Street?

The assumption (and practice) as I see it is that the game of loyalty is all about loyalty from customers to the company. Which is to say loyalty is a one-way street. Is this the right way to cultivate and demonstrate loyalty?  Let’s listen – bolding mine:

“The need to keep losses under control led many companies to cover the claims required by their contracts…. then refuse to renew customer policies to avoid future losses. State Farm took a radically different view. It had no intention of canceling customers it had expended so much energy and expense to acquire and maintain, most of them for many years….. Most important, disloyalty to customers would be philosophically unacceptable. Loyalty is a two-way street. Moreover, loyalty must be seen to be a two-way street. How could State Farm possibly expect its customers and agents to remain loyal if the company did not demonstrate loyalty when the chips were down.”

Why Is It The So Many Have Accomplished So Little When It Comes to Customer Retention and Loyalty?

I’ve in the customer retention and loyalty game for 15+ years. I’ve been in the arena not just a mere spectator. I have witnessed many talk fine words, I have seen many undertake all kinds of projects and programmes to increase retention/loyalty. Yet, I have seen none succeed in any meaningful-sustainable way.  Further, when I read about which companies are doing a great job in this domain it is always the same names or new entrants with new business models.

What gets in the way of existing large, publicly quoted, companies excelling at cultivating customer loyalty?  Almost every company approaches retention and loyalty tactically. So you have a bunch of business practices that drive customers to leave. Instead of changing these practices executive put in place retention teams. Let’s be clear, most organisations have merely added on retention teams and other gimmicks to their existing way of doing business. Is this enough? Let’s listen:

Building a highly loyal customer base cannot be done as an add-on. It must be integral to a company’s basis business strategy. Loyalty leaders …. are successful because they have designed their entire business system around customer loyalty…

 

Summing Up and Closing Out This Conversation

 

I have shared a particular perspective with you and I have invited you to listen to the speaking of a particular author.  How does this strike you?  Revolutionary? New? Fresh? Stale? Impractical? Nonsense?

Now is the time for me to come clean.  The perspective that I have shared with you is the perspective that I have held since my earliest days in the Customer arena. And the speaker you have been listening to is none other than Frederick F. Reichheld.  When did he speak the words that I have shared with you?  The words were put on paper and issued as a book (The Loyalty Effect) back in 1996.

Look around at what is going on and you are likely to find that customer retention and loyalty has been approached tactically. The usually result is add-on’s to the existing way of doing business. The add-on’s can take many shapes: new website, Facebook / LinkedIn presence, customer retention team, an online customer community, new CRM system…. The results?  Are they not meagre?  Which companies by taking this approach have vaulted into loyalty leaders?  I cannot think of a single one.

Why is it that those who have jumped on the Customer bandwagon have jumped on it tactically, and not strategically?  20 years ago, Frederick Reichhheld said this:

The real trouble is that many, perhaps most, executives today have adopted a paradigm which at its heart is inconsistent with loyalty-based management. Press them, and few will insist that the primary mission of their companies is to create superior value for customers and employees so investors can prosper…”

This strikes me as being the heart of the matter. Within the context of the current paradigm it is simply not possible to cultivate meaningful loyalty. So all that is left is tactics, add-on’s, poverty of increases in loyalty, more tactics….

I wish you well and thank you for your listening. Until the next time….

 

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….

 

 

Experience Centric Business: A Bridge Too Far For Many?

I experience, you experience, s/he experience, they experience, we experience.  That is what is so.  Yet how deeply are you (and me) conscious of the quality (or the lack of it) of the experiencing that is occurring? Further, where does the quality of experience sit on the business priority ladder?  Let’s shine a light on these questions by looking at a recent experience.

I attended a training course in London not that long ago. Here are the facets of this experience that are still with me:

  • Cramped. The train room showed up as small for the size of the audience. No – small is not the right word. It lacks the flavour of experience. The experience-full word is cramped. There was not enough space for the most basic/normal of human needs. Example: whenever I needed to leave the training room I had to ask people to move their chairs into the tables so that I’d have just enough room to slide past them.
  • Hot. Stuffy. Hot. Stuffy. Due the room being packed with bodies and the lack of an adequate ventilation system the room got hot.  Not true. If we are going to stick to experience then it is more accurate to say that I got hot as in hot/uncomfortable. By the end of the first day of training I had a headache and felt so exhausted.
  • No internet!  We all needed good quality internet access in order to do the exercises. Some of us got good enough access. Others didn’t – I was one of those that didn’t. By the end of the second day of the three day training course the internet access issue had not been sorted out. Given that some 50% of the classroom time was given to doing the exercises I found myself to be frustrated and bored. It really took willpower to stay in the training room on the second day.
  • Long sessions, no breaks.  Imagine starting at 8:30 and having to wait until 12:30 for the first formal break – break for lunch. A computer may be totally ok with that. A brain in a vat – a purely cognitive being – may be totally ok with that. I was not. I got restless. I longed to stand up, stretch, walk… That is what goes with being an organism designed for movement.
  • Poor visuals.  What is the point of splashing something on the screen if the folks in the room cannot read it because the font size is too small?

Why was my learning experience so poor?  Was it because the folks who did the training lacked intelligence? No. Was it because there is a lack of knowledge about what kind of environments are conducive to learning? No. Was it because the folks who delivered the training had no personal experience of being learners in a training room?  No.

 

I draw your attention to the distinction between training and learning experience. I say that my learning experience was so poor because the focus of the training makers and doers  was on the training.  Notice, that when you focus on training you focus on the functional – activities (tasks, resources, materials) that go into training. Whereas when you focus on the learning experience you are focusing on the human – the experience of the learners.

Is that all there is to the matter? No. I suspect that the drivers that shaped the training were cost and time.  Not experience.  Why not hire a better-larger training room-venue? Because it would have cost more.  Why not break the training down into two smaller groups thus giving more attention to each learner?  Because it would have cost more.  Why not schedule more breaks during the day and reduce the learning day to a more humane one?  Because then it would take more days to get through the training. More days for the learners to take off to do the learning. And more time for the trainers to do the training. In business time is money – in this case a bigger cost.

Now I wish to draw your attention to what I found most interesting. During the course of the first day of training most of the experience issues were voiced by the learners. And brought to the attention of the trainers. Yet no effective action was taken – to deal with any of these issues.

 

Summing up, there is huge gap between the talk of Customer Experience and the customer’s experience.  It occurs to me that this is largely because of the following:

  1. Revenue and Cost are the primary drivers of business not Experience.
  2. The default and pervasive way of showing up and travelling in organisations is Function (processes, activities, tasks, resources…) and not Experience. Further, the folks who often play pivotal roles in Customer Experience efforts are pervaded through and through with Function. And they automatically assume that improving Function improves Experience.
  3. Experience requires Flexibility of response to this particular customer in this particular context yet the organisational default is Standardisation on the one best way to carry out this function.
  4. The language of experience  is a human kind of language. That poses a challenges in organisational contexts because the human is unwelcome in organisations.  Organisations prefer a rational / scientific language – the language of the engineer, the economist, the technician.  Notice, how I have had to correct myself in my speaking a few times just to be true to my experience.  Language matters – as a famous philosopher said “Language is the house of being.”
  5. The work that is necessary to generate the kind of experiences that customers desire is simply work that folks in organisations are unable or unwilling to take on. Maybe it shows up as unnecessary. Maybe it shows up as merely ‘nice to have’. Maybe it shows up as too much hard work for little benefit – lack of ROI. Maybe it shows up as disruptive.

This may show up as bad news. I am clear it is good news. Why?  Because the rewards of Experience excellence are only open to those few willing to make sacrifices today to harvest the promise of reward in the future.  Put differently, the route of Experience excellence is available only to those who truly believe in the value of Experience centred business.   For the majority, I say that experience centric business will continue to be a ‘bridge too far’.

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

What Does The Doublespeak of Customer Love Disguise?

Looking beyond the doublespeak of customer-centricity, customer engagement, customer love to see what is truly there.

In his latest post Andrew Rudin questions the advice of customer experts and provides his take on the language that has come to pervade marketing, sales, service – business in general.  Allow me to share a passage or two from his post:

“We’re bombarded with messages from experts about getting close to customers. How close? Really close! Lustful words like embrace, love, and passion have migrated from romance novels into business blogs. Marketers freely infuse love as a marketing schtick, with buyers as the intended objects. But when sellers get amorous, I remember the words to Are You With Me Baby? by the LeRoi Brothers: “At least tonight, you know that I’m in love with you.” Explanation, not needed.”

In this conversation I wish to look beyond the fashionable language and see what shows up.  Let’s start with the role of the customer in business.

What Is The Role Of The Customer In Business?

Let’s look at business as a system for creating value.  The first question is this one, who truly matters? Look into the very constitution of company and company law. You will find it is the shareholders – specifically the shareholders who individually or collectively control the voting rights.  Next question, what is the ONLY concern of shareholders?  Wealth.  Shareholders of the business are looking for the Tops (at the helm of the business) to generate wealth for them .

Which brings us to the role of customers. What is the role of customers in business?  I say it is to enable the business to survive and thrive by feeding the business.  What do I mean by feeding the business? I mean to provide the money that the business needs. Put differently, customers are the source of cash that flows into the business and keeps the business going.

What can we conclude?  How about this, a customer is only of importance (valuable) if s/he is source of cash flowing into the business.

What Is The Extrinsic Value Of A Customer To A Customer-Centric Business?

Anyone who truly understands the genesis and true meaning of customer-centricity will be familiar with Customer Lifetime Value (CLV).  How does one calculate CLV? Be estimating a figure for the lifetime (years, months), then estimating the value (revenue, contribution..) that this customer will generate for the business over the lifetime.  The smarter folks will discount the value to take into account the time aspect of money.

Here, I draw your attention to a critical point. The past does not count, only the future counts.  What the customer has contributed to the business in the past is irrelevant.  It is only his value to the business in the future that counts.

Why calculate CLV?  To differentiate between customers. In my days at Peppers & Rogers it was the done thing to perform the calculation and then put customers into three buckets: MVCs (most valuable customers), MGCs (most growable customers), and BZs (below zero). And the corresponding ‘strategies’ were to retain MVCs through great service / preferential treatment, increase the value of MGCs by persuading them to buy more at higher prices (x-selling, upsetting), and get rid of the BZs as they were taking value away from the business.

What is going on here?  Pure self-interest.  As Tops we wish to enrich ourselves – earn and walk away with the greatest wealth for ourselves. To do that we must please the shareholders.  To please the shareholders we have to generate as much as value as we can. To do that we need to focus on customers – those customers who hold the promise of generating the most value for us ‘today and tomorrow’.

Here I wish to add that the drive to automate interactions between the customer and the business saw its genesis in the promise of technology to cut down the cost of customer interactions by replacing employees with technology.  By cutting down the costs the value generated by customers, as in CLV, could be increased – sometimes substantially.  The fact that automation of interactions led to benefits to customers was an added bonus – not the primary motive. Disagree? Then answer this question, why have IVRs proliferated rather than being ripped out?  Customers hate IVRs and have hated IVRs for years.

What Value Does Business Place On The Intrinsic Value Of A Customer?

Look beyond the label of customer. What do you see?  I see a human-being – a flesh and blood human being.  Is there any intrinsic value to a human being.  Let’s take a look at that by examining real life examples.

When I see a pregnant woman, a fellow human being, standing on a train, I offer her my seat. Usually I don’t even get to do that. Why? Because some other man or woman has offered her a seat by the time I open my mouth.

When I see an elderly wo/man with what looks like heavy luggage I offer to carry that luggage up and down the stairs – usually at train stations. I do so without being asked.

Once I was in a Deli – some 10-15 years ago. Whilst ordering lunch (sandwiches, drinks…) I notice a young lady. She was not dressed well. She had a handful of coins and she was counting them.  She looked hungry – I saw her face looking at the product. Yet she ordered a tea. I calculated that this was the case because she could only afford a tea. All this happened in seconds, maybe a minute or two.  Immediately, I took out £20 and gave it to her.

When it comes to birthdays and Christmas, I ask folks not to give me presents. I tell them if they wish to contribute to me then they should do so with cash.  Do I need the money? No. So why do I ask for it? Because I get joy out of putting that money into Kiva and then using it to fund folks around the world, who have ideas but lack the money, to build better lives for themselves and their loved ones.

Am I the only one doing these things? No. One of the people I value highly is the President of a leading player in the VoC market. He travels a lot. When he travels he helps folks put their luggage in the overhead compartments. It is not an option for him to not help those who need help. And he gets joy out of this.

I suspect you, also, have at some point in your life carried out an act of kindness. If not, then I suspect you have read about, seen or witnessed an act of genuine human kindness and been moved by it.  Why?

Here is my answer. We ‘know’ at some deep level that there is intrinsic value in a human being – a human life. Why? Because, for the most part, most of us are brought up that way: to value human life, to treat folks right….. To be helpful members of society.  What is heroism but the sacrifice of oneself for the wellbeing of our fellow human beings?

What about the business world?  Does the business world of largish corporations recognise and honour the intrinsic value of a customer as a fellow human being?  Look into this and you will find that aside from small scale community based ‘mom and pop stores’ there is no genuine relating between the business and the customers. A small ‘mom and pop store’ where mom and pop work will get to know their customers: their backgrounds, their family, their hopes and dreams, their challenges…. their intrinsic value.  Not so the case in corporations where the roles remain but the folks that fill those roles is like hotels: the rooms are the same but occupied for short periods of time by many guests.  Further, and this is important, genuine human relating is not permitted in corporations.  What is permitted, even encouraged, is fake relating: scripted interactions, scripted smiles…

When is the last time that a largish corporation paid for life-saving treatment for one of its customers? Or took actions that take time and money to make a customer’s dream come true?  Yet some celebrities have done exactly that for their fans. And folks in communities get together to do that if one of their own is in need.

No, the business world of corporates is blind to the intrinsic value of a customer, any customer.  The only value that counts is the extrinsic (CLV) of the customer – however this is arrived at, whether by intuition or by making complex calculations.  I, the corporation, do something for you if and only if the calculations shows that you will do something for me which is of higher value so that there is good ROI for me.

Summing Up

Without friendship life is hollow which is why almost all of us seek and cherish our genuine friends.  Without love for some person or some activity life is missing something essential. Without being loved by someone or some community life is missing something that is essential to our well being.

So relationships do matter. Love does matter.  However, it would be foolish to expect this kind of relating occurring between a customer and a corporation.  And experts/gurus encourage companies to love customers is pure BS.

Yes, the language that folks in business and those who make a living from pandering to businesses (the media, business gurus, consultants, professors…) has changed.  It speaks of customer engagement, customer relationships, loyalty, customer love….

No, the game of business has not changed.  The game is the same as it has always been – causing ‘surplus rents’ for Tops (in the form of pay, bonus, shares) and Shareholders.  All the Customer talk is doublespeak – it disguises the transactional orientation, it disguises the lack of morality and ethics in big business.

I leave you with this thought / assertion: It is easier to change the words, the images, the slogans, the story than it is to change the system (purpose, values, priorities, people, roles, relationships, practices, tools…).  Therefore, in the absence of a catastrophic breakdown, only the words, image, slogans, and stories change.

I thank you for your listening and I wish you the very best.  Until the next time….

Erich Fromm On The Central Challenge Of Cultivating Meaningful Relationships With Customers

What Is The Central Challenge Of Building Meaningful & Profitable Relationships With Customers? Is this challenge about opening up 24/7 access to your business through any and all channels?  Is it about coming up with new products and services that attract customers like bright lights attract moths at night-time?  Is it about taking out costly, unpredictable, unreliable human beings and replacing them with technology?  Is it about collecting and mining all the data you can get your hands on to generate insight to customers and entice them with the right offer, at the right time, through the right communication channel?  Is it about redesigning processes and gluing up all the interaction channels so that the customer experience across the customer journey is an effortless one?

Perhaps. Or maybe this is simply thinking inside the existing way of showing up and travelling in the world.  What way am I referring to? The technological way. What kind of way is that?  It is the way that refers to human beings as human resources. It is the way that refers to customers as assets. It is the way that thinks that listening to the voice of the customer is the same as reading statistics and text which summarises and details the survey responses coming in from some customers. It is the way that seeks to replace human beings and human to human conversations with automated interfaces and self-service…..

I invite you to listen to the speaking of Erich Fromm written in the 1940s (bolding mine):

The insignificance of the individual in our era concerns not only his role as a business man, employee, or manual labourer, but also his role as a customer. A drastic change has occurred in the role of the customer in the last decades. The customer who went into a retail store owned by an independent business man was sure to get personal attention: his individual purchase was important to the owner of the store; he was received like somebody who mattered, his wishes were studied; the very act of buying gave him a feeling of importance and dignity.

How different is the relationship of the customer to a department store. He is impressed by the vastness of the building, the number of employees, the profusion of commodities displayed; all that makes him feel small and unimportant by comparison. As an individual he is of no importance to the department store. He is important as “a customer”; the store does not want to lose him, because this would indicate that there is something wrong and it might mean that the store would lose other customers. As an abstract customer he is important; as a concrete customer he is utterly unimportant. There is nobody who is glad about his coming, nobody who is particularly concerned about his wishes. 

– Erich Fromm, The Fear Of Freedom

It occurs to me that many (if not most) organisations struggle to cultivate meaningful-profitable relationships with customers despite spending significant sums on the likes of customer analytics, CRM, marketing automation, and VoC. Why?  My experience of the last 15 years working in the Customer space is that action has been at the abstract level of customer and customers. And almost nobody has paid attention to the experience of the concrete flesh and blood customer as a human being.  As such technology has been used to remove rather than enhance what little was left of the human to human relating.  Technology can do many useful things including increasing access and reducing effort. What it cannot do well is this: create, enliven, enrich human relating.

Timpson: Business Success Through Humanistic Leadership

Allow me to introduce you to a little know business gem: Timpson. It is a family business operating 1000+ stores, annual turnover in the region of £200m, and annual profits of £10m+. Today, this organisation (and its leadership) is on my mind again. Why? Because of what I saw and read on LinkedIn.

This is the photo that captured my attention:

Timpson Free Outfit Cleaning

The last time I looked there were 240+ likes. Here are some of the comments that caught my attention:

  1. “Leadership at its best”;
  2. “Hats off to CEO James Timpson”;
  3. “Very thoughtful and caring”;
  4. “Pay it forward”;
  5. “Brilliant. More selfless acts needed”;
  6. “If another company did this it would probably seem like a publicity stunt, but Timson’s record speaks for itself..”; and
  7. “How many Advocates and how much good feeling does that create for Timpsons who are already an exceptionally socially responsible company…Great win win!”

Why did these comments catch my attention? Because these comments provider a pointer towards the following:

  1. The shape-look-feel-character of humanistic leadership: authentic as opposed to faking it in order to manipulate others (publicity stunt); thoughtful and caring as opposed to thoughtlessness and indifference to our shared humanity – where humanity is hidden under the labels of customer, employee, supplier; and selflessness leading to paying it forward as recognition of one’s good fortune and shared humanity as opposed to unlimited greed dressed up in fine sounding words like maximising revenues and profits.
  2. The impact human-centred leaders make on us: we tend to think of this kind of leadership as “leadership at its best”; and those who exercise this kind of leadership call forth respect – when we are authentic we take our hats off only to those whom we genuinely admire, esteem, respect in terms of their virtues and/or skills.

  3. The benefits that tend to show up as result of exercising humanistic leadership: the good feelingthat this kind of leadership calls forth in just about everyone except sociopaths and those professionally trained as economists and MBAs; and the advocacy-loyalty that is automatically brought into play as a result of evoking this good feeling.

I am clear that we (those of us living in the UK and USA) live in transactional, individualistic, non-humanistic, competitive cultures. So those of us, who are ‘smart’, are likely to be tempted to fake humanistic leadership to get the benefits (respect, status, increased profits, wealth) without paying the necessary ‘price’. So here’s the paradox. The exercise of humanistic leadership does generate advocacy, loyalty, revenues, and higher profits. However, this is not the case when humanistic leadership is exercised for the sake of harvesting these benefits. Why? Because, one can only fake it so long before true intentions leak out and are detected by those who are being manipulated.

Is Timpson faking it? Is this offer of free outfit cleaning for the unemployed merely a publicity stunt? This is what Justin Parkinson of the BBC says on this blogpost:

The problem is that getting suits dry cleaned usually costs in the vicinity of £10, which can be prohibitive for unemployed people looking to return to work.

The offer, in place since 1 January, has been taken up by hundreds of people, Timpson chief executive James Timpson says. “When people are going for interview it’s important to look and feel smart and getting their suit dry cleaned is part of that,” he adds. “It makes people more confident and gives them that 2% extra chance of getting a job. We just thought it was a really good idea.”

In my experience, one of the core challenges of taking a humanistic approach to doing business (including the exercise of human-centred leadership) is that we have a dim view of human nature. Our actions show that we are convinced that if we appear ‘soft’ then we will be taken. So how has this offer turned out for Timpson? Here is more from that BBC blog:

“We just trust customers,” says Timpson. “We had one lady who came in with a cocktail dress and we told her to hold on. But that’s the only instance of a customer taking advantage.”

What is going on here? How to make sense of this? It occurs to me that somewhere deep down in us, our human decency is intact. Put differently, for most of us, there is something deep in our being that makes us think twice and usually prevents us from taking advantage of those who show concern for us, our fellow human beings, and our shared humanity. Where we transgress and do take advantage of the kindness of others, guilt comes into play. That is the price we pay for not honouring the best of our humanity.

Now you may be wondering what this has to do with Customer. I say take a look at what has been done in the name of customer service. Take a look at CRM. Take a look at customer loyalty programmes. Take a look at Customer Experience. Take a look at all that has happened and all the money-effort that has been expended in the name of the Customer. Now ask yourself how it is that despite all of this customer loyalty and employee engagement are stagnant – at best. There is your answer: humanistic leadership (and management practices) are the access to calling forth the good feeling that in turn leads to engagement-loyalty-advocacy: from your people, from your suppliers/partners, and from your customers.

If you are interested in learning more about Timpson then check out this piece that I wrote some time ago as it continues to be relevant and instructive: Timpson: Shifting-Transforming Culture Through Language and Practices.

Note: At the invitation of Bob Thompson, I write the Human-Centred Leadership column on CustomerThink.com. This conversation was published there last month.

You may have noticed I have not been conversing much recently here on this Blog. I have been dealing with back pain for the last six weeks. This has limited by ability to do that which it takes to create-share conversations. I hope to back in action soon.  If you missed me then I thank you for your patience. If you didn’t, excellent: now you know that you are wasting your time-life listening to me, please go and do something that lights you up!

Customer / Leadership: What Is The Access To Cultivating Greatness?

It is the time of the year that many are pushing out their predictions for 2015. I am not in that business: I lack a crystal ball.  Further, I say that the future is not already made. The future is unborn and how you/i/we show up and operate in this world will shape how 2015 turns out.  So in this final conversation of 2014, I want to share with you my thoughts on what it takes to become great; greatness necessarily involves effecting significant and substantial change.

Let’s assume that you wish to reshape your organisation – to effect significant, substantial, change in the way that the organisation operates.  Perhaps, you wish to transition your organisation from a product-centred orientation towards  customer-centred orientation. And/or shift the fundamental stance of your organisation from ‘extracting value’ from your customers to being generously rewarded (by customers) for simplifying-enriching the lives of your customers. It could be that you want to move from treating your employees as resources (things) to treating them with dignity as fellow human beings…..

What is the access to that?  Is there an organisational equivalent to Ali Baba’s “Open, Sesame!”? You know some kind of hidden magical recipe that provides you access to untold riches, instantly, without significant effort, discipline, and/or sacrifice?  I invite you to answer that for yourself. How has all the strategy stuff worked out? What about all the process change / six sigma stuff? Or the customer journey mapping? What about your investments in CRM systems and other technologies (e.g. IVR) have they taken you to the heights of sales effectiveness and/or customer service delight?  Let’s not forget the VoC feedback- has that unlocked the door to customer loyalty riches?

Greatness does not lie on the road well travelled, greatness lies on the road less travelled. Greatness requires dedication – the kind of dedication that flows from total commitment; this kind of commitment arises in response to a possibility-call that resonates with the very core of your being. Greatness requires the ultimate sacrifice: yourself – your way of showing up in the world and the manner of your travel in this world.  Allow me to give life to this through a story (bolding mine):

There was an artist who was so devoted to her art; nothing else in the world had any attraction for her. She had a studio, and whenever she had a moment to spare her first thought was to go to that studio and work on the statue she was making. People could not understand her, for it is not everybody who is devoted to one thing like this. For a time a person interests himself in art, at other times in something else, at other times in the home, at other times in the theatre. But she did not mind; she went every day to her studio and spent most of her time in making this work of art, the only work of art that she made in her life.

The more the work progressed, the more she began to feel delighted with it, attracted by that beauty to which she was devoting her time. It began to manifest to her eyes, and she began to communicate with that beauty. It was no longer a statue for her, it was a living being. The moment that statue was finished she could not believe her eyes – that it had been made by her….. She felt exalted by the beauty of the statue.

She was so overcome by the impression that this statue made on her that she knelt down before this vision of perfect beauty, with all humility, she asked the statue to speak, forgetting entirely that it was her own work…… there came a voice from the statue: “If you love me, there is only one condition, and that is to take the bowl of this poison from my hand. If you wish me to be living, you no more will live. Is it acceptable?” “Yes,” she said, “You are beauty, you are the beloved, you are the one to whom I give all my thought, my admiration, my worship; even my life I will give to you.” ….. She took the bowl of poison, and fell dead. The statue lifted her and kissed her by giving her its own life, the life of beauty and sacredness …..

– Hazrat Inayat Khan, The Art of Being and Becoming

Let me end this conversation by posing this question: What possibility (or cause) matters to you such that you are willing to be and do as the artist (in the story above)?  It occurs to me that this is question worth pondering and answering as you/i head into 2015. I wish you a great beginning and the very best for 2015.