The big mistake at the heart of Customer efforts

In over 10 years of work in the Customer field with a variety of organisations in a variety of industries I have noticed a pattern when it comes to the way that the people (usually the Marketing folks) approach CRM, Customer Experience and Customer Engagement efforts:

  • An intense focus on what can be done to extract more value from our customer base; and
  • Little or no consideration given to the question “How do we add value to the lives of our customers?”

And that is a big mistake especially in today’s always on Internet world where customers who have been milked share their stories on the Internet.

A simple analogy will make this clear.  Imagine that through efforts to date you have saved up so much money in the bank of customer goodwill.  The shortsighted approach is to raid the bank of customer goodwill to ‘grow revenues and profits’ in the short-term: this is how you destroy brand equity.  The harder but long-term sustainable approach is to do stuff that grows the amount of money in the bank of customer goodwill – and to take a portion of that increase in revenues and profits.

Another way of thinking of this is the story of the Three Little Pigs.  Which do you want to be the First, Second or Third little pig?

Alan Mitchell in his latest piece in Marketing magazine has put it well:  “The second level of this brand narcissism……..is where the brand manager forgets the purpose of the brand and starts acting as if it’s the job of the customer to add value to the brand (by paying a price premium or being an ‘advocate’, for example), rather than the job of the brand to add value to the customer.

My advice: forget relationships, forget experiences, forget engagement, focus – obsessively – on the following sets of questions:

  • What exactly is the gap between what we promise and what we actually deliver? What steps are we taking to acknowledge and close the gap? Is the gap growing narrower or wider?
  • What do our customers expect of us (whether we have promised this or not) and how are we doing on meeting those expectations? What are we doing to close that gap?
  • What can we do to enrich the lives of our customers – today and tomorrow? What are we doing to enrich the lives of our customers?

To paraphrase Andrew Grove: “Only those paranoid about continuously creating superior value for customers survive.”

Why do folks from Marketing lead CRM and Customer Experience efforts?

Time after time I have found that CRM and Customer Experience efforts are housed under the Marketing function and led/driven by folks from Marketing.  This practice is unquestioned: it is simply taken for granted that Marketing is the function that is most intimately connected with and has the best understanding of customers.  Is that actually so? Let’s take a deeper look.

The Customer Services function is taking one call after another from customers. In a large multi-national that ends up with millions of calls every year. And each of these calls has involved a verbal interaction between the customer and the company representative taking the call.  It can even be argued that the Customer Services function can be viewed as an R&D laboratory that can provide useful information on which customers are calling, what customers are calling about, what matters to customers, how well the organisation is doing in terms of acting on and meeting the needs/wants of customers.  And in the process this function can surface both what is broken in the organisation (from a customer perspective) and opportunities.

The Field Services and Technical Support Services function are in similar boat to the Customer Services function.  These function interact – face to face visit, telephone conversations – with and are thus directly exposed to the customer.  The Field Services folks actually enter into the customer’s home.  So it clear that the engineers / technicians will get a good grasp of customers: who they are, their needs, what is not working, opportunities to create new products/services for customers etc.

Lets take a look at the Sales function.  Who can argue that his function and the people are in intimate contact with customers.  These people know who is buying, who is not buying, which products are moving and why, what matters to customers, what changes need to be made to attract/convert more customers, what competitors are up to etc.  Any sales person who is not adept in interacting with customers will not last long in his/her role.

Onwards to the Finance function.  This function is responsible for the oversight of money flows between the customer and the organisation.  As such the Finance folks tend to know which customers are good credit risks, who pays on time, who has to be chased, when to chase customers etc…..

Now lets take a deeper look at the Marketing function.  Who in this function has a face to face conversations with customers?  How about telephone conversation?  Or even email conversations?  The closest that folks from marketing get to customers is when they sit in on a focus group.  What does this tell them?  It simply tells them what a group of disparate people will say in a laboratory environment.  There is ample research to show that what people say and what people do can be dramatically different.  And also the answers you get depend highly on the context – change the context and you get different answers to the same questions.  The other means of the Marketing folks getting customer insight is through market and consumer research carried out by the marketing agencies.

So if it is not the wealth of interactions – conversations – the Marketing folks have with customers then what else do they have that qualifies them to lead/own/drive CRM and Customer Experience efforts?  Perhaps it is their mindset – lets take a look at that.

What is the typically Marketing mindset – the one that is actually in practice not the one that is talked about by academics in marketing texts?  Is it not one of ‘manipulating’ consumption – getting people to buy what the organisation has to sell at the terms that are acceptable / beneficial to the organisation?  And most Marketing functions have done a great job of that.  Put differently, Marketing functions can be great at creating, disclosing and promoting stories (true, false or in between) that germinate in people minds thus encouraging the first trial.  This is called getting new customers – customer acquisition.

What is Marketing’s impact or expertise in retaining customers?  How will even the state of the art (personalised, relevant, timely) piece of marketing communication drive me to continue to do business with the company if I am dissatisfied with the existing product, the difficult to get in touch with Customer Services, or the Field Service folks that don’t turn up on time to fix the issue?

Are the folks in Marketing even aware of the issues that I have with the company?  Do they care?  If so can they actually do anything about it?  Is the Marketing function respected and does it wield influence over the Sales, Customer Services, Field Services, Logistics and Finance folks?  In many organisations the answer to the last question is no.

What does the Marketing function actually focus upon when a new customer comes on board?   The better armed Marketing functions have Customer Insight teams that build statistical models to predict what to sell next, and when, to which customers.  These up-sell and x-sell efforts may or may not work.  That all depends on what the rest of the organisation is doing (Sales, Customer Services, Logistics, Field Services, Finance) in terms of delivering on the first promise that Marketing made to the customer.

I cannot see a logical basis for the Marketing function to own/lead/drive CRM and Customer Experience efforts.  Contrary to the popular understanding Marketing is not a customer centred function.  And the folks that work in Marketing do not have a better understanding of customers.  Arguably they have less than the folks in Sales, Customer Services and Field Services.

What are your thoughts on the matter?  Your reasoning?

Blind to the obvious – Part III

In the previous post I pointed out that CRM, Customer Experience and Customer Marketing teams are blind to the need to rethink and redesign the deep structure of the organisational operating system.  In this post I want to point out another blindness.

CRM, Customer Experience and Customer Marketing teams (and the elite in their organisations – the Tops) are blind to the fact that customers are more than economic beings or consumers of goods – they are people, they are human beings.

Customers are people:  they are human beings and when dealing with organisations they want, even need, the human touch.  John McKean wrote a book titled ‘Customers Are People: The Human Touch‘ which spells out what the human touch includes: Appreciation (acknowledge me), Respect (treat me respectfully), Trust (your actions must match your promises so that I can trust you).  Personally, I do not believe that John McKean goes far enough.  Today customers have a voice, express that voice through the Internet and want companies to hear and act on that voice – to enter into conversation with them.

Now it is quite possible to acknowledge a person in a way that the person does not feel acknowledged.  Too many organisations are collecting data and passing this onto their front line staff so that they can ‘acknowledge’ the customer.  Yet the humanity of the acknowledgement if missing – try it for yourself with the world ‘hello’.  You can say this word with reverence, with affinity, with care or you can say it in a rushed way or in a robotic way.   This is one practical example of being blind to the fact that customers are human beings with human needs, there are plenty more  – which I will not go into right now.

As a business coach I worked with my brother when he set up his car sales, servicing and valeting business.  At the end of the design phase we agreed some simple rules that drive the way that his business treats his customers:  treat each and every customers as if he/she is father, mother, brother or sister.  As a result of practicing this philosophy all of his business today – several years later – is referral business.  Customers come back again and again and they bring their family, friends and close work colleagues with them.

When you get that customers are people – human beings – you get that Customer Service in the fullest sense is the key: how you greet, welcome, talk with and treat customers when they are buying from you, when they have problems with using your products or service.  In this world, marketing as usually practiced has only a secondary and limited role to play.  Why? To a large extent your customer do the marketing for you – you can make it easier for them to do that by providing a platform like Amazon does to rate vendors and the products.

Blind to the obvious – part II

I asserted in my last post that  many if not most organisations working on customer initiatives are blind to the obvious.  What specifically do I mean?

Organisations of all kinds (including businesses) are blind to the need to rethink and redesign the deep structure of the organisational operating system.  A deep structure that is brilliantly designed for the 20th Century (to push out and push on to customers the products and services that the organisation has produced) and totally inadequate for the needs of today.  A structure which encourages substantial investments in marketing and sales to ‘conquest’ customers whilst simultaneously insisting that every effort is made to cut the operating costs associated with supporting these ‘conquests’ in their post-purchase needs – cuts in customer service, field service, technical support.  A structure in which the right mind does not talk with the left – where Marketing is making x-sell and up-sell offers to customers who have already made complaints to Customer Services.  A structure  where there is talk of customer relationships and customer loyalty (which require a long-term play) yet the focus of effort is to do whatever it takes to make the revenue and profit numbers today.  A structure which spends millions on CRM projects whose impact – on the whole is – customer alienation and higher customer dissatisfaction.  A structure which rests on deception: making a set of promises (to the customer) that the organisation knows that it is unable and/or unwilling to deliver.  A structure that encourages keeping the customer at a distance and thus discourages any form of authentic customer engagement lest that customer see behind the veil of the story that the organisation tells to outsiders.

I will look at another perspective on being ‘Blind to the obvious’ in my next post.