Service Providers: why trust matters and what you can do to cultivate it (Part II)

In the previous post I set out the importance of trust  especially for services businesses like travel, insurance, banking, media, telecommunications.  In this post I want to share with you the insights that come of the research that Prof. Chris Haliburton and  Adine Poenaru carried out in 201o on the banking, insurance and mobile telecommunications industries – USA and UK.

What matters to customers?

According to the research customers are looking for service providers to level with them by providing high quality, clear, simple to understand communications that provide useful information that avoids unpleasant surprises and enriches the customers lives.  Examples include: keeping policies simple and easy to understand; clear language in policy documents so that customers are not mislead; keep me up to date with all the changes that save customers money; making the pricing more straightforward – easier to understand; letting the customer know as and when there is unusual activity on the customer’s account etc. In my book, customers are asking for service providers to be honest with them – to act with integrity (in the moral sense).

Second, customers are also looking for service providers to make them feel that the company cares for them.  Examples that show this kind of caring include: offering existing customers the same kind of deals that the companies offer new customers; putting customers before profits; doing what they said they would do; providing accurate truthful answers to questions; making customers feel valued etc.  In my book this second dimension is showing benevolence through action rather than lofty mission statements and fine sounding values that are not put into practice.

Third, customers are a looking for courteous conduct and high level of competency from the front-line employees that interact with and serve them.  The kind of things that customers want include: knows my policy inside out; sales people to be honest; dedicated account managers; all front-line staff trained to a high level and knowledgeable about and up-to-date with new plan; courteous and customer focused service etc.  To my mind this need speaks to the rational dimension of trust: credibility, competence and reliability.

How you can cultivate trust: 10 lessons

What can you do to cultivate trust between your organisation and your customers?   Prof. Chris Haliburton and  Adine Poenaru make the following recommendations (paraphrased, added, amended by me):

Deliver the core service right. As previous experience + word of mouth + corporate reputation are the drivers of loyalty then it follows that you must deliver the core service right.  Specifically, it means: meet (perfectly) the basic and core customer needs; actively search for, listen to and act on the voice of your customers (including social media); and manage your corporate reputation.

Get it right when it really matters.  Find out what events and points in the customer journey matter most to customers and get these right.  The literature refers to these as moments of truth.  In the insurance field that is likely to include checking if you are covered, getting treatment pre-authorised, making a claim and getting reimbursed quickly.

Make customer feel that you are looking after them.  A great way of doing this, as mentioned earlier, is to provide information, advice, product and offers that leaves them feeling enriched (better off).  Another way is to provide customers with a choice of channels that they can use to get through to you.  It also means having enough human beings on hand to deal with customer enquires as opposed to putting self-service technology between you and your customers and forcing them to use it.  I had a horrible experience with the Santander IVR today and could not get through to a human being – I do not feel cared for at all.

Ensure your front-line staff embody high standards of competence and ethics (honesty, acting in the customers best interests).

Customise the customer experience.  This means being a ‘sense and respond’ organisation rather than a ‘make customers fit into our standard policies and processees’. It is more than ‘treat different customers differently’ – it includes treating the same customer differently depending on the particular circumstances and emotional needs of the organisation.

Act the best of human: admit mistakes, apologise (genuinely) and fix them.  Whilst compensation is OK it is not enough it falls short of what we expect from considerate human beings (and organisations) – this point is spelt out clearly by James Watson in one of his latest posts and I recommend that you read it.

Improve communications (from the customers perspective) across the board.  Your communications need to bear in mind the needs (and interests) of your customers.  In particular the communications must be speak the language of your customers, be relevant, be concise and above all they must not mislead.  Customers will forgive you for making honest mistakes but they will not forgive you for deceiving them.

Look after your existing customers. This means providing existing customers with the same products, offers, service and attention that you bestow on courting new customers.

Provide simple easy to understand and clear contracts.  Don’t catch your customers out with cleverly crafted contracts written in legalese that your customers will not read and cannot understand.  Do the opposite write fair contracts, spell out the benefits and cons, don’t hide stuff in the small print, and above all write contracts in a language the customers can understand.

More transparency and integrity in pricing.  The opposite of this practice is what the oil, gas and electricity companies do – ramp up prices as soon as wholesale prices go up but be glacial in cutting prices when wholesale prices go down.   A great example of transparency and integrity in pricing was shared by Howard Shultz in his book Put Your Heart Into It – coffee prices tripled almost overnight and Starbucks did not put up prices because they had plenty of coffee in stock.  Starbucks did increase prices eventually (when they had to buy coffee) and they kept these price increases to a minimum and took the time to educate customers why prices were going up. It may be the approach British Gas is taking right now to deal with customer concerns and anger over predatory pricing.

My take on this

Actually my take on the whole topic of trust and how to cultivate it is embedded in this post.  Going further here are some of my thoughts:

Complexity takes a double toll on the customer.  First, it is hard for the customer to find the right (the best) ‘product’ for himself.  Second, it is that much more likely that the customer will be given inaccurate advice by the front-line staff. Why? Because as the ‘product range’ grows and the complexity of the ‘products’ for sale grows (functions, features, terms, conditions, exclusions, excesses etc) it is hard to ensure that the front-line staff actually understand the ‘product range’ and can provide accurate advice.  Knowledgebases don’t help much. Why? How well would you perform if the customer was on the phone or right in front of you?  Would you not feel the stress – the need to respond quickly?  Yes, if you are a normal human you are likely to favour speed over accuracy – to reduce your stress and make your performance targets.

Poorly written communications including ‘product’ literature takes a toll both on the customer and on the front-line.  If it is hard for the customer to understand, is ambiguous or deliberately confusing to the customer then it is likely that it will occur similarly to the front-line especially the people who are new to the job.  That means that the front-line is that much more likely to misunderstand and provide inaccurate answers and advice to customers.  It is also likely to mean that it takes that much longer to train the front-line staff to become competent.

Now that we have the competence dimension out of the way let’s deal with the ethical dimensions of integrity and benevolence.  Is it really news to us, to anyone, that customers want us to be straight with them and treat them as if they matter?  I suspect it is not.  So the challenge is to live – embody – what we already know.  Either the issue is that our society is full of dishonest, uncaring people or there is something about many organisations that turns honest, caring people into people who come across as being dishonest and uncaring.  What do you think?

Customer-Centricity: how to become customer-centric in one easy step

If you listen to the pundits then customer-centricity involves a complete transformation of your business

Reading the mountain of ink that has been written on all things Customer (strategy, insight, experience, service, CRM) one would be forgiven for concluding that it is a difficult if not impossible task for a large organisation to become customer centred.  You have to come up with a great strategy, to segment your customer base, to work out LTV, to build propensity models, to implement complex CRM systems, re-engineer processes, overhaul the call centre and employ an army of change specialists to get the culture change you want. But is it that hard?

What lies at the heart of the customer-centric orientation?

Jonathan Field spelled that out last year in one of his blog posts:

“…..you’ll solve most of your business problems by spending more energy figuring out how to best understand your customers’ lives, psyches and challenges, then working to solve your customers problems and deliver delight to their doorsteps.”

That is the philosophy behind customer-centricity. Don’t like the word philosophy then call it the guiding doctrine or the core guiding policy.  But can you short circuit this process (avoid all the time, effort and cost in understanding your customers) and get there quicker?  Yes you can, it is really easy to act now – today.

How to become customer-centric in one easy step

If you really want to become customer centric then simply give up self-serving category practices that exploit the customer rather than build goodwill with the customer. What do I mean?  Allow me to give you example of self-serving, exploitative, industry practices:

  • mobile network operators deliberately make their pricing plan complex so that it is difficult for customers to compare apples with apples and also because the operators make more money as customers typically end up on more expensive plans.
  • supermarkets who deliberately put the milk and eggs at the back of the store so as to force customers to walk past tempting goods and thus make impulse purchases that they never intended to make when they first came in the store.
  • financial services providers that deliberately make their plans/policies confusing using jargon that customers do not understand, putting in place all kinds of loopholes that they can use to avoid paying out and finally wrapping it all up in legal terminology that few of us will ever understand.
  • utilities that deliberately make their tariff complex and are swift increase price because wholesale prices go up but then take their time lowering prices when wholesale prices drop.
  • financial services providers that sell products that are worthless – the PPI scandal is a great example of an issue where the red flagged was raised back in 1998 and then it took another 13 years for the banks to concede but only when the courts ruled against them.
  • software companies that make all kinds of wonderful sounding claims (business and technical) some of which are a stretch of the creative imagination and many of which will be hard to turn into reality.
  • budget airlines force customers to ‘uncheck’ the insurance option twice.  Why?  Because it makes more money for the budget airlines.

You might think that I am picking on these industries.  I am not.  I am well aware that every industry has self-serving category practices (that are considered ‘business as usual’ by all the players in that industry) that at minimum make life hard for customers and at worst exploit the customers.  So what does it take to give up these category practices?  Nothing – really it takes nothing, you can stop right now.  Yet, in practice it takes consumer watchdogs, regulatory bodies and often the courts.  Let’s just take a look at the utilities industry as it is in the news.

British Gas says it will be simplifying tariffs

Ofgem – the gas and electricity regulatory in the UK – has recently been piling up the pressure on the industry players. After making more hushed noises Ofgem conducted a comprehensive review concluding that the energy companies are making excessive profits and that they have to change their ways starting with their tariffs – make them simpler to understand and compare.  Well Ofgem came out and said this, the industry players did not like it one little bit and accused Ofgem of getting its facts wrong – or of misinterpreting the data.  Looks like the Tops in British Gas have changed their minds.

I have been listening to Jeremy Paxman (“JP) interviewing Phil Bently (“PB”) the MD of British Gas and here are the highlights:

  • “There are too many tariffs – 544 tariffs to choose from from six or so big energy players” – PB;
  • “Consumer find it hard to compare tariff, chose tariffs and understand how to save money” – PB;
  • “As an industry we should put our hands up and say we should be doing more to help” – PB;
  • “We have not made it easy” – PB;
  • JP shows a graph that compares the consumer bill against wholesale prices and asserts that whilst wholesale prices have gone down bills have not;
  • PB makes the argument that wholesale prices are only one part of the cost base;
  • “the whole point is simplifying tariffs, giving customers choice, giving them transparency..” – PB

If you want to listen to the interview or read the article click here.

My take on this

It is easy to become customer-centric by ditching self-serving category practices that exploit customers.  Yet, it is not in the interest of the Tops nor of the system that they play in to do that.  Why?  Because it hits revenues and profits and the name of the game is to maximise revenues and profits by legal and sometime illegal means.

When industries are locked into certain structures it requires a powerful outsider to come in and disrupt the status quo.  That outsider can be a regulator like Ofgem, it can also be another business that is not invested in the status quo.  Apple comes to mind (music, phones), Virgin comes to mind, Salesforce.com comes to mind and so does Skype.

When Tops (and companies) who have been taking customers for a merry ride (and are only changing their ways because of the regulator) talk about transparency take this with a pinch of salt. Why?  Read one of my earlier posts that deals with transparency.

The first step in changing your ways is to be honest and say it like it really is – think Domino’s Pizza and their admission about the quality of their pizzas and what they were going to do about that.

Being “authentic about your inauthenticity” is an essential step and yet few of us have the courage to take that step especially if you are one of the Tops – Gerald Ratner and his fate may be stopping many.