Generating Customer Loyalty Through The Experience Not The Program

First and foremost I thank each and everyone who continues to listen the speaking that occurs on this blog.  A special appreciation for those of you who make the time to add your voice to the conversation by commenting. I wish each of you the very best for this year – may this year be the best year of your lives.

Today, I’m up for grappling with the subject of customer loyalty as I have been immersed it it since the second half of 2016 – professionally as a consultant and personally as a customer.

What Are We Talking About When We Talk Customer Loyalty?

Before diving in, let’s stop and really think about what we are talking about when we talk loyalty. According to Wikipedia:

Loyalty is devotion and faithfulness to a cause, country, group, or person. Philosophers disagree on what can be an object of loyalty as some argue that loyalty is strictly interpersonal and only another human being can be the object of loyalty.

So customer loyalty, viewed in light of this definition, is about generating devotion and faithfulness to a company and/or its brands.

Is it possible to generate devotion and faithfulness to a commercial organisation?

I can read that which the Guardian newspaper publishes online for free. Yet, I took up the Guardian’s request to pay a fee and become a Guardian member. Why pay for something that I can get free? Because, I find myself in tune with the journalism/editorial values of this newspaper. And I wish to ensure its health so that it can continue to do that which it does.

Football fans.  There are folks (customers) who spend significant amounts of time and money to travel up and down the country in order to watch/support their football team. Their devotion isn’t limited to buying tickets / watching the games. These customers also tend to be the one’s that buy the club’s merchandise and proudly display it.

Then there is Apple – clearly there are many who have been devoted and faithful to the Apple brand through good times, difficult times, great times….

So the answer to the question is yes – it is possible to generate devotion and faithfulness to a commercial organisation.

Are Loyalty Programs The Way to Customer Loyalty?

Recently, I found water pouring through the ceiling of the room below the main bathroom upstairs.  Fortunately this matter was covered by home insurance. The claims folks were helpful and appointed a contractor to replace the ceiling, strip the wallpaper and put the room back into the state it was before the damage occurred.

Unfortunately for me and my family the contractor appointed to carry out the repair work did the work in a slapdash manner.  So I raised the matter with the insurance company and told them I did not want this contractor to do the repairs in the upstairs bathroom. Ongoing, I may name and shame at a later point in time.

Who to use to do the work on the upstairs bathroom?  When faced with this question the immediate answer was the contractor that had carried out work on my home in 2014 when a car had driven into the front wall.  Why this contractor?  Because this contractor did such a professional job: upfront work of scoping and detailing the work; organising the work so that the right tradesmen turned up at the right time/sequence; adhering to the schedule of work; doing a great job of the job to be done; and providing a 2 year guarantee.

So it was the experience of dealing with this contractor including and especially the quality of their work -start to finish – that made me remember them some 3 years later and turn to them.  Not because of any loyalty program.

Back to football clubs and their devoted/faithful customers – the fans. Turns out that collect points and cash them in for rewards type of loyalty programs don’t work. Why not? That is not how a fan (loyal customer) thinks of loyalty. How does such a fan think? Something along the lines of “Remember me. Occasionally, offer me a free drink at your bar and/or invite me in to meet members of the team / club.”  What kind of loyalty is this? The human kind – the kind that the human race has known / practiced for many years. The kind that has allowed human tribes to face obstacles, together, and flourish.

Conclusion: Genuine Loyalty is Built Through the Experience Not the Program

Quality. You can build quality into the production process. Or you can employ quality inspectors to find defective products at the end of the production line.  And/or customer services folks to deal with the complaints arising from poor quality products.

It occurs to me it is the same with customer loyalty.  You can either build loyalty into the way that you do business – product, marketing, sales, logistics, service etc – or you can setup customer loyalty programmes to compensate your customers for the defects in the quality of customer’s experience of your products, your services, your organisation.  And/or your failure to adequately differentiate yourself from your competitors.

I say that the smarter way is to build loyalty into the way that you do business such that no customer loyalty program is necessary to keep your customers coming back to you:

-For Apple this means regularly creating cool/useful products/services that nobody else provides and marketing them in the Apple manner.

-For Amazon it means continuing to do that which Amazon does so well: being easy to do business with, delivering the goods the next day or two, keeping customers informed, and importantly looking out for the customer in multiple ways.

-For the Guardian newspaper it means standing for the causes that matter to the kind of people who are Guardian readers.

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

 

 

 

 

Cultivating Goodwill Involves More Than Reducing Customer Effort

Is the access to building meaningful relationships with customers merely a matter of improving the customer’s experience of your organisation by making it easy for the customer to do business with you?

The temptation to orient oneself this way and thus the pull of approaching the matter of customer loyalty as an engineer / economist is strong.  With the engineering approach the focus is on: improving access say through digital channels; making it easer for the customer to self-serve; putting in more interaction channels; tweaking and automating business processes; standardising way customer scenarios are handled…. As an economist the focus is on generating / extracting value from the customer and all decisions are about ROI – I give if and only if I am guaranteed to get back more than I gave.

What the engineer and the economist both lack is humanity.  In the worlds of the engineers and economists there is no room for that which lies at the core of human. What am I talking about? Think about a genuine smile. Or an authentic warm greeting. Or generosity. Or the act of touching one another even if it is a hand that touches you lightly either through a handshake or a light tap on your shoulder as an expression of thanks / gratitude ….

What is it that I am getting at here?  Allow me to explicate it by relating a recent true story.

I was working in my study. My wife came in and grabbed hold of file from one the shelves. Then left. A little while later she returned to put the file back on the shelf. In the process she dropped an A4 lever arch file (full) on to the desk. The file landed on my right hand and the keyboard of my MacBook Pro. Both my right hand and the MacBook Pro were damaged.

Noticing that I was more upset at the broken MacBook keys, my wife took it upon herself to get the keys replaced. I forewarned her it would cost her to get the repairs done: the MacBook was outside the warranty period, and in any case the damaged was a result of our actions.  I also pointed out that she should not expect the repair to be cheap; Apple is not in the cheap marketplace.

A few days later she popped into an Apple store to find out what it would take to get the keys replaced. The folks at Apple were friendly and directed her to go online and book a time to get the work done. They also told her the work could be done in the store and in about an hour. So later that day my wife booked an appointment with Apple for when she was next going to be in town.

On the appointed day-time, my wife handed over the MacBook Pro for repair. And hour later, as promised, the MacBook Pro was like new. My wife thanked the helpful Apple employee / engineer and asked: “How much do I owe you?” The answer was that there was nothing to pay, the work had been done free of charge. My wife walked out of that store delighted.  When she came home she told me the story. And then went on to tell me how unusual it is to experience that kind of generosity. She ended up by saying Apple products are not cheap and they are worth every penny.  I find myself in agreement.  So that is my wife’s experience of Apple.

What is my experience? I am also delighted with Apple. Why? Because the folks at Apple treated my wife well. My wife knows nothing about technology. If the folks at Apple had told her the cost was £150 or so, she would have paid that. She was determined to restore my MacBook Pro to its pristine condition; I look after my stuff.  My wife is someone that really matters to me. As such Apple’s generous treatment of my wife occurs (to me) as Apple’s generous treatment of me. And importantly, vindication of my decision to do business with Apple. Paying a premium for Apple products occurs as a good decision. A smart decision. Even a wise decision.

I say to you that the path of customer effort reduction / minimisation will lead you to the customer’s heart. Yet it is your generosity towards your customers that will open up the customer’s heart and allow you place in that heart.  When you/your organisation make life easier for me, I experience an ease of doing business with you. When the folks in your organisation treat me with friendliness-kindness-generosity I experience cared for, even loved.  And that makes all the difference. Let me say that again: there is world of difference between the experience of ease and the experience of being cared for / loved.

When it comes to your work on customer experience and/or customer loyalty you can settle for cultivating the experience of ease or the experience of gratitude / love.  Your choice.  In making that choice I invite you to consider that when my wife recounts her Apple experience, the ease of doing business lies in the background of her story. The friendliness / helpfulness of the folks in the Apple store lies in the foreground. And right in the centre of the foreground is the generosity.

Customer Experience And Loyalty Starts And Ends With The Product!

Back in 2011 I asked this question: Customer Experience: What About The ‘Product’? And I ended that conversation with the following assertion:

The product is not in one domain and Customer Experience in another domain.  Any serious examination of the Customer Experience has to grapple with the product and how well it does the job that the customer is hiring it to do.  That means designing that product so that it is both useful (does the job) and usable (easy/intuitive) to use.

Today, I stand by that conversation. In particular, the necessity and critical importance of the ‘product’ (the core product or service which calls forth the customer to reach out and interact with the organisation which is selling that product or service) to any serious work on improving-transforming the customer’s experience of the organisation.

I also find that I was wrong. How so?  Today, I’d sum up that conversation differently.  How would I sum it up?  As follows:

 The ‘product’ is not in one domain and Customer Experience in another domain.  Any serious examination of the Customer Experience (as in the customer’s experience) has to grapple with the ‘product’ and how well it does the job that the customer is hiring it to do.  That means designing the ‘product’ so that it is useful (does the job), usable (easy/intuitive to use), and sensuous (evokes the senses and calls forth awe). When you get the ‘product’ right you will learn that in a substantial-meaningful way that the customer’s experience and loyalty start and end with the design of the ‘product’. If you have the right product then you can concentrate on marketing (advertising, distributing) it. Little need to waste your time on the latest corporate nonsense: customer experience management as in customer interaction management across a multitude of interaction channels.

What has led me to this way of summing up the matter?  Apple. In particular, Apple’s latest financial results – the largest quarterly corporate profit of any company.  Let’s look into the quarterly figures a little bit more: revenue of $75bn, profit of $18bn, and Apple sold 34,000 iPhones per hour.  Allow me to share this paragraph with you (bolding mine):

Apple chief executive Tim Cook called the company’s sales “phenomenal” and said the company had sold 34,000 iPhones an hour every day of the quarter. “This volume is hard to comprehend,” Cook said.

I am now going to make my most controversial assertion. Ready?  I say that the field of Customer Experience Management (as in customer interaction management) is attractive to and for the mediocre. Yes, the mediocre!  You know the folks that do not design-sell great ‘products’.  ‘Products’ that do not simplify-enrich the lives of our fellow human beings.  Look if you make a great product then the world beats a path to your door -including overcoming any hurdles along the path.  Only CXM fools ignore the critical importance of the ‘product’. Isn’t the product the reason that the customer takes action – to actual reach out to the business in the first place?

 

The Beauty Of Apple

I wonder if you have noticed something about the world of business?  You may have not noticed it as this feature of business life is pervasive, so enduring, that lies in the background.  I found myself reawakened to this feature recently.

Some consultants and sales folks were carrying around and using the standard issue company owned laptops made by the likes of Dell, IBM, HP, Toshiba…. Others were carrying around and using Apple MacBook laptops (Air, Pro) – they had purchased these themselves out of their own money.

What is it that I observed? I noticed that the consultants and sales people using Apple MacBook laptops handled their laptops as if these were sacred objects. I noticed these folks look, actually look, at their MacBooks as I look at landscapes that catch my eye and take my breath away. I noticed that these folks displayed their MacBooks so that all could see. And I noticed that these folks carried their MacBooks with a certain kind of pride.  Most importantly, I noticed a certain kind of affection, even reverence, between the consultants and their MacBooks.

What about the consultants and sales people carrying around the corporate issue laptops made by the likes of Dell, IBM, HP, Toshiba..? I noticed these folks showed no pride, no reverence, no affection for their laptops. They treated them as functional machines – mere tools to do a job.  They dragged them out of their cases. They plonked them on the table. When not using them them ‘hid’ them by putting papers on top of them….

Have you figured out what feature of the business world I am talking about?  I am talking about the lack of beauty in the world of business! I am talking about:

  • conversations devoid of the beauty of genuine human warmth-friendliness;
  • products that function yet are devoid of beauty;
  • offices that are devoid of colour, fragrance, plants, flowers and have the feel of a factory in many ways;
  • call-centres in run down parts of the country where the human  spirit sinks as the body arrives for work;
  • retail stores that have the look and feel of hospitals….

I notice that some folks have been putting Apple down due to the lack of innovative industry making, coffer filling-overflowing, products.  This may be the case.

I notice that the same folks that put down Apple for its lack of innovation point towards Samsung for its innovation especially in the area of smartphones. What I have not yet experienced is an Apple customer handing in their iPhone for a Samsung Galaxy. Why not?  It occurs to me that Samsung products lack that which pervades the Apple products: beauty that calls forth awe, affection, even reverence.

How can you and your organisation cater for and meet one of the most fundamental human needs: beauty?  If you have got around to designing customer experiences then ask yourself if you have even considered this need for beauty?

Integrity: Is This Why Apple, John Lewis, and Amazon are Masters of the Customer Experience?

Apple, John Lewis, Amazon: Masters of the Customer Experience?

Christmas is over and three organisations stand out for me: Apple, John Lewis, and Amazon. Why? It occurs to me that the people in these organisations get customers as human beings, are clear about the kind of customer experience they are up for delivering, AND have put in place a system for delivering this kind of customer experience.

On Integrity and the Customer Experience

Integrity is essential to performance. Breakdowns in integrity will generate breakdowns in performance. Breakthroughs in integrity will generated breakthroughs in performance.  If your organisations defines performance as cultivating meaningful relations with customers through the right customer experience then integrity determines the quality of the customer experience.

It occurs to me that when I am talking about integrity I am pointing at a state of being, an outcome, and a system.  Let’s consider these in turn.  

  1.  What do I mean when I say ‘integrity as a state of being’? By this I mean the way of showing up in the world.  Specifically, I mean a way of showing up in the world where you are committed to emboding-living your word.  Can we call this an embodied attitude?  The outer manifestation of an inner stand-commitment.

  2. ‘Integrity as an outcome’ occurs for me as delivering on the promises made. There are two dimensions here: the promises made to oneself, and the promises made to the others. Integrity as an outcome is measurable – you did or did not deliver on your promise. If you are in any doubt about whether you delivered on the promise then ask your ‘customer’ – the person who is holding you to account for the promise (implicit, explicit) you made.

  3. When I speak ‘integrity as a system’, I am pointing at the parts and the interconnectedness of the parts, so as to come together as one harmonious system whose default disposition is to deliver on the promises made.

When I look at Customer Experience through the lens of integrity, it occurs to me that the real measure of one’s integrity as a state of being (point 1 above) is what one does and continues to do is to put in place ‘integrity as a system’ (point 3 above) so as to deliver ‘integrity as an outcome’ (point 2 above).

What is the Learning Here?

It is not enough to want. It is not enough to believe. It is not enough to have good intentions.  It is not enough to talk fine words.  What really matters is the design of the system.  When you take a look at the system that generates outcomes you will find that all human systems lack integrity; at the level of the person, the family, the organisation, the community, the nation and even the world what there is is the lack of integrity.  It occurs to me that the lack of integrity is the default condition – it is what shows up automatically. I see it as the principle of entropy at play in the human world.

It occurs to me that the reason that the likes of Amazon, Apple, and John Lewis stand out in terms of the Customer Experience is because the people in these organisations, starting at the very top, get the importance of integrity especially ‘integrity as a system’. And as such there is  relentlessness in enhancing ‘integrity as a system’ at levels of their organisations: individuals, teams, functions, channels, business units, the organisation, the organisation and its suppliers, the organisation and its partners, the organisation and its customers…..

Why is it that so few organisations excel in the way that Amazon, Apple and John Lewis excel? Because it takes genuine commitment, relentless focus and lots of hard work to put together and keep up integrity at the level of organisation.

Related posts:

Want a breakthrough in customer-centricity in 2012? Start with ‘Integrity’

‘Integrity’, leadership, communication and performance: the most valuable post you will read this year?

Has the lack of ‘Integrity’ and authentic leadership comprimised the ‘workability’ and performance of the West?

Without Integrity, Is Talk of Customer Focus Just Cheap Talk?

The Power of Essential Integrity In A World Where Integrity is Lacking

 

 

Is this the most serious misunderstanding plaguing customer-centricity?

Misunderstanding, reality and narrative

There are so many misunderstandings around customer-centricity that it is hard for me to know where to start.  In this post, I want to deal with a particularly dangerous and widespread misunderstanding.  Some of you have led yourself to that misunderstanding after reading my last post on customer-centricity.  Before I deal with this misunderstanding I want to draw your attention to the following:

Reality is amenable to and readily supports any narrative that we place on it.  Once upon a time the narrative was the earth is flat.  Later the narrative changed to the world is round.  Once upon a time there were witches in the world, now, at least in the West, there are no witches.  For a little while the narrative was almost all of the DNA in the human genome was junk DNA.  Today the narrative is that vast majority of so called ‘junk DNA’ is essential to and involved in key biochemical processes.  I hope you get what I  am getting at.

No single definition and/or ‘understanding’ of customer-centricity will exhaust customer-centricity.   Put differently, customer-centricity seems so obvious until you really grapple with it.  And when you grapple with it all kinds of stuff shows up – some of it rather surprising.  Furthermore, what shows up as customer-centric in one context may not show up as customer-centric another context.

With that out of the way and the context set, lets grapple with this misunderstanding.

To be customer-centric you have to be nice and give you customers what they are asking for

Far too many people confuse customer-centricity with doing what the customer wants, giving the customer what he wants, and being ‘nice’. Some go further and equate customer-centricity with being a patsy, a pushover. I say this is the most serious misunderstanding plaguing customer-centricity. 

Why is it so dangerous?  First, there are the people who understand customer-centricity this way and for them it shows up as unrealistic and distasteful.  Given this way of understanding customer-centricity they dismiss it and/or want nothing to do with it.  Second, there are a different group of people who speak and act as if customer-centricity is as simple as giving the customer whatever he asks for.

Customer-Centricity is neither this simple nor this simplistic

To both of these groups of people I say that you are mistaken.  You’re mistaken, badly mistaken.  Customer-centricity is neither that simple nor that simplistic.

I say that being customer-centric is a stand that you take and not a fixed set of behaviours.  What kind of stand am I talking about?  The kind of stand that says that the only acceptable profit is that made by creating genuine value for customers.  It means letting go of existing policies and practices that enrich the company at the expense of customers  – ‘bad profits’. Taking the customer-centric stand is not possible without courage.  The kind of courage Tony Hsieh and the Zappos management team showed when the business was in deep trouble financially and they gave up a lucrative source of revenue, profits and cash because it did not fit with their vision and stand to be the brand renowned for great customer service.

I say that being customer-centric is as much about being proactive in coming up with new products/services/experiences that you believe will create value for customers as it is about reacting to what customers say/ask for.  As I write this Apple/Steve Jobs/iPod/iTunes/iPhone/iPad come to mind immediately.  Or think of Amazon, ebooks and the Kindle.

I say that being customer-centric is as much about influencing/persuading customers as it is listening to/obeying customers.  Yes, there is a role for the right advertising, marketing and selling.  Customers are human beings and they do not necessarily know what is best for them.  Even if they do know, customers often do not do what is best for their well-being.  This is where you can use insights into the human functioning to come up with a design that nudges the customer towards the right behaviour.  It is also where something more forceful than a nudge can be necessary.  Again I cannot help but think about how Jobs handled the antenna/signal reception issue around the iPhone.  Or think about how Zappos persuaded shoe buyers that it was OK to buy shoes online without trying them on.

I say that customer-centricity only makes sense in a particular context and as such being customer-centric requires a “yes” when it is appropriate to say “yes” and a “no” when it is appropriate to say “no”.  This point was the key point made by Frances Frei and Anne Morriss in their book Uncommon Service.  As they say “you have to be bad in the service of good”.  They talk at some length about Commerce Bank: to be great at convenience and service Commerce Bank chose to only offer one banking product (checking account) and paid the worst rates of any bank in the market place.   Look, if you turn up at my Mercedes dealership and want to pay Ford prices then the most ‘customer-centric’ behaviour is for me to drive you to the nearest Ford dealership!  Furthermore, sometimes a “no” is simply in the best interests of your customer even if he does not know it.  This was the point I was making in this earlier post.

I say a lot.  What do you say? If you the situation at hand differently to me then speak up and share your understanding.

Do you know the difference between a good strategy and a bad strategy? (Part IV – Objectives)

This is the fourth in the series of posts on strategy making using Richard Rumelt’s masterpiece: Good Strategy Bad Strategy.  If you have not already done so then you may get value out of the reading the first three posts:

Do you know the difference between good strategy and bad strategy?  (Part I)

Do you know the difference between good strategy and bad strategy?  (Part II – Fluff)

Do you know the difference between good strategy and bad strategy?  (Part I – Failing to face the problem)

What passes for strategy and strategy is so often simply muddled thinking or why so many websites generate a poor user experience

One thing that I have noticed is that so many websites are poor – from the users perspective.  Why is that?  I have my point of view which I pleased to see validated by Mark Adams of PortalTech Reply in the May edition of Internet Retailing:

“If your strategy, for example, is to use mobile to generate significant revenues the key considerations, technology choices and approach are going to be very different from setting out to use mobile as brand engagement channel…….. Often the strategy is to accommodate selling, loyalty, brand engagement, in-store integration, social marketing, payments and so on with no clear path on how each of these areas are going to be addressed and at what point.”

Sounds like a ‘dog’s dinner’ of aims/objectives masquerading as strategy to me.  That got me thinking that it is worth sharing what Richard Rumelt has to say on the matter of aims, objectives and strategy.

What does Richard Rumelt say about aims, objectives and strategy?

Richard Rumelt says that strategic objectives are one domain that differentiates good strategy from bad strategy:

One of the challenges of being a leader is mastering this shift from having others define your goals to being the architect of the organisation’s purpose and objectives.  To help clarify this distinction it is helpful to use the word “goal” to express overall values and desires and to use the word “objective” to denote specific operational targets……. Good strategy works by focusing energy and resources on one, or very few, pivotal objectives whose accomplishment will lead to a cascade of favourable outcomes.

In his book,  Rumelt identifies two pitfalls in the areas of objectives: ‘dog’s dinner objectives’; and ‘blue sky objectives’.  Let’s take a look at each in turn.

Dog’s dinner objectives

This is what Rumelt says (keep in mind my earlier comment on poor websites and the quote on mobile):

A long list of “things to do”, often mislabeled as “strategies” or “objectives”, is not a strategy.  It is just a list of things to do. Such lists usually grow out of planning meetings in which a wide variety of stakeholders make suggestions as to things they would like to see done.  Rather than focus on a few important items, the group sweeps the whole day’s collection into a “strategic plan”.  Then, in recognition that it is a dog’s dinner, the label “long term” is added so that none of them need be done today.

I absolutely love this paragraph, it strikes as pointing at the ‘truth’ in a similar way to the Dilbert cartoons and leaves me saying “How true!”.  How does it strike you?

Blue sky objectives

Back to Mr Rumelt and his wisdom on strategy:

“The second form of bad strategic objectives is one that is “blue sky”.  A good strategy defines the critical challenge.  What is more, it builds a bridge between that challenge and action, between desire and immediate objectives that lie within grasp.  Thus, the objectives a good strategy sets should stand a good chance of being accomplished, given existing resources and competence.……  By contrast, a blue-sky objective is usually a simple restatement of the desired state of affairs or of the challenge.  It skips over the annoying fact that no one has a clue as to how to get there.

The purpose of a good strategy is to offer a potentially achievable way of surmounting  a key challenge.  If the leader’s strategic objectives are just as difficult to accomplish as the original challenge, there has been little value added by the strategy.”

Lets revisit 1997 and Steve Jobs return to the helm of Apple

Back in 1997 Apple was burning through its cash and was expected to become bankrupt in months.  The imperative was survival – increasing the cash pile and cutting costs to buy time to focus on product renewal.  What did Steve Jobs do?  The very first thing, the most thing, he did was to persuade Microsoft, the arch enemy, to invest in Apple.  By doing so he was able get his hands on $150 million (in return for non-voting shares).  This dismayed the Apple faithful, left them stunned and led to heckling and booing.  Something that Jobs had not experienced before.  Nonetheless it was a masterstroke as it bought him time to:

  • Cut the number of products from 15 to 4;
  • Streamline distribution by selling  through an exclusive national dealer as opposed to many retailers;
  • Focus marketing on a single message “Think Different”;
  • Terminate licensing deals that enabled other manufacturers to undercut Apple with Mac clones.

Result: operating expenses were cut nearly in half. Within months, Apple was back in the black and could focus on developing and bringing to market ‘killer products’ worthy of the Apple brand as personified by Jobs.

It occurs to me that Steve Jobs was more than creative or a showman (like Richard Branson).  He was a master strategist he focussed relentlessly on the essence.  How different to so many others who call themselves strategist and claim to put forth strategies.  What do you say?