What Can We Learn From Ryanair’s Change Of Heart?

Amidst the slavish devotion to customer experience and the ideology of customer-centricity I find Ryanair refreshing and instructive – including its recent change in stance towards how the organisation treats its customers.  What can we learn from Ryanair and this change in stance?

Financial fortunes (not customer needs) shape management decisions

I find it instructive that trigger for this change of stance is due to a change in its financial fortunes:

  • profits may miss or be at the lower end of its range of 570m euros to 600m euros (£480m to £508m);
  • a dip in ticket prices and booking levels for September, October and November;
  • the continued success of its competitor (Easyjet);
  • shareholder concerns that customer service issues were hitting sales.

It occurs to me that what is refreshing about Ryanair’s management team is the refreshing honesty about what motivates-drives their actions.  According to this article, Ryanair’s COO and deputy CEO ‘has dismissed the idea of “wholesale changes” at the carrier as it attempts to improve customer service’. Why is that? In the words of the COO

Our model is to satisfy shareholders. There are other models to satisfy passengers.”

I say that a safe assumption, for any publicly listed company, is that the focus on the management team is no meeting the financial numbers. And any talk of customer-centricity has to be interpreting within this context.

The critical importance of the business model and how it shapes organisational actions

In order for there to be a viable business there has to be a viable business model.  Using the business model canvas this means that the following business model elements have to fit together effectively: revenue streams, customer segments, customer relationships, distribution channels, value proposition, cost structure, key activities, key resources, and key partners.

If you take a deeper look at the business model canvas you cannot help but notice that right in the centre sits the Value Proposition.  The organisation has to engage in specific activities to create the value proposition. These activities and the way they are carried out determine the cost structure of the business.  Therefore, it is essential that the choice of customer segments, customer relationships, distribution channels and revenue streams deliver revenues that exceed the cost base and deliver a suitable return on investment.

It occurs to me that Ryanair’s COO understands the implication of the no frills airline model a lot better than the media which has been implying that the Ryanair management team have seen the light and will be making significant changes.  This is what the Ryanair COO is reported as saying:

There is a balance and maybe we have gone too far one way. But the idea there is going to be wholesale changes is wrong.

We need to be better at communicating with customers, but that is no big deal.

When we take €70 from someone for having the wrong size bag we should do it with sympathy rather than glee.

Great advice for all businesses: don’t unnecessarily annoy your customers

I notice that Michael O’Leary (CEO, Ryanair) has woken up to the fact that it is not wise to unnecessarily annoy customers.  He is reported as saying:

We should try to eliminate things that unnecessarily annoy customers.

It occurs to me that this does not go far enough. If you are in a management position where you have the power to shape organisational behaviour then I encourage you to end policies and practices that unnecessarily annoy:

  • your customers;
  • the people that work in your business and create value for your customers;
  • your distribution partners;
  • your suppliers.

Why? Because that which is unnecessary should not be done. Doing that which is unnecessary and annoys key stakeholders is stupid: self defeating in the longer term.

It does not pay to steal in the longer term

It occurs to me that it is worth bearing the long term in mind. Whilst it is possible to escape the consequences of your actions in the short term, this is rarely the case in the long term. In the long term your history catches up with you.  When I was a child my father used to tell me stories to do with human nature. One story, I have remembered vividly, it’s moral was ‘If you steal expect to get caught, sooner or later. The only way not to get caught is not to steal.”

Looking at the Ryanair situation, it occurs to me that Ryanair has been stealing from its customers for many years and this is the year when Ryanair’s management has got caught. And so is having to do something about it.

What did Ryanair steal from its customers? The humanity that one human being expects and counts on another human being to deliver: human dignity.

Book review: Extreme Trust by Don Peppers and Martha Rogers

Let’s get up to date

If you have been reading the recent posts you will know that I have been diving into, exploring and sharing what I have learned as I have been reading Extreme Trust the latest book by Don Peppers & Martha Rogers.  This weekend I finished reading the entire book and so this post is my, personal and biassed, review of the book.  If you have not read these first 2 – 3 posts then here are the links:

Extreme Trust: can honesty be a means of competitive advantage (part 1)

Extreme Trust: can honesty be a means of competitive advantage (part 2)

What kind of a book is Extreme Trust?  Think back to The One to One Future

How best to describe Extreme Trust the latest book by Don Peppers & Martha Rogers?  Perhaps the best place to start is to compare it with the other books Don and Martha have written.  Which is the book that is the closest to Extreme Trust in its flavour?  The One to One Future.   That book, The One to One Future,  was a delight to read and it said what needed to be said about the state of marketing and spelled out the future.  Extreme Trust has a similar flavour and had provided me with a similar experience.   What did I like about it?  What spoke to me?  In Extreme Trust, Don and Martha do the following effectively:

  • Inject human beings and in particular the social/co-operative/empathic being of human beings back into the whole Customer conversation – yes, look closely and you are likely to find that for all the talks about relationships the focus of the Customer movement has been on processes, data and technology (that is as true for Don and Martha as any other authors);
  • Address the ‘elephant in the room’, the greed based, short term focussed, deceitful/manipulative context of ‘business as usual’ which is oriented towards/focussed on extracting revenues and profits from customers usually by taking advantage of the ignorance/vulnerability/helplessness of customers;
  • Explore the theme of trust – why it matters, how it operates, what difference it makes, what benefits it delivers to social life and business/organisational life; and
  • Spell out the why/how organisations will have to become ‘trustable’ whether they want to or not – social technologies, smartphones and the fundamentally social/moral wiring of human beings make it inevitable

Extreme Trust is not a book about marketing, it is not a book about customer service, it is not a book about social media.  Extreme Trust, if read/viewed through a wide angle lens, is essentially about a new paradigm in business which involves and impacts everyone – the Tops, the Middles, the Bottoms, the Customer, the Community.  Essentially, Extreme Trust sets out a new philosophy of doing business based on an understanding of the social being of  human beings and how social media has given real weight to the hollow sounding expression “The Customer is King”.   If that is the background of the book than the customer and the relationship with the customer sits in the foreground and can best be encapsulated in the following diagram:

Let’s take a brief look at the chapters

The chapter headings are meaningful and so I want to share them with you and provide my brief take on each one.

“Trust: not just a good idea. Inevitable.”  Don and Martha make a persuasive argument for the importance of doing the right thing by customers proactively and they spell out the benefits of being trustable (USAA) and the downside of taking advantage of your customers (AOL).

“Serving the interests of customers, profitably”.  Here Don and Martha describe and point out the ‘flaws’ of ‘business as usual’ and argue that the central challenge for Tops is to come up with an appropriate business model for the time – a business model that allows the company to generate “good profits” and rule out “bad profits” by aligning the interests of the customer and the company.

“Trustability: capitalist tool”.  In this chapter Don and Martha ‘get real’ – they get that the lever for effecting change in business is through the profit motive as opposed to being good or doing good.  So Don and Martha strive to show you doing right by the customer, being a trustable company, leads to superior long term performance.  In short, trustability is an asset like ‘brand’ is or at least used to be.

“Sharing: not just for Sunday school”.  The social nature of human beings as evidenced by co-operation, sharing, reciprocity, sense of injustice and punishment of cheaters is explored here.  The key point is that we do not have to be encouraged to share, to cooperate, to reciprocate, to punish those that do not share/cooperate/reciprocate – to be human is to be/do this stuff effortless, it is the default.  Social production and the radical implications it has for business is touched upon here.

“Trust and the e-social ethos”.  In this chapter Don and Martha take the social being of human beings and look at/describe how this shows up in the e-social world of social networks.  The implications are explored through real life examples of companies that got it right and those that did not. This chapter is heavily linked with the previous one.

“Control is not an option”.  Business as usual can be characterised by “command-control-secrecy-spin”.  Well this used to work great and is now well past it’s sell by date.  The world is much more interdependent, fluid, unpredictable – just look at what has been happening since the financial crisis of 2008.  And anyone who has studied ‘systems and systems thinking’ will get that control is an illusion.  Yet as Kahneman has shown in his latest book (Thinking Fast and Slow) we human beings are wired to strive for control, think we can control more than we can control, and look for/find order when none exists.  Don and Martha share these features of our existence and spell out some approaches that Tops can take to deal with the new reality.

“Build your trustability in advance”.  In this chapter Don and Martha spell out the advantage of being a trustable company through examples of real companies that encountered hard times and where reputation for trustability (with core customer base) made all the difference.  In short, if you look after your customers in the good times they look after you during your bad times.

“Honest competence”.  It is not enough to be honest, it is not enough to be competent, your organisation has to show up as being honest and competent.   Don and Martha divide competence into product competence and customer competence  and explore each one.  Turns out that organisations really struggle with customer competence.  The key issue – inability/failure to empathise with customers, to see the world through their eyes.  Don and Martha share the instructive story around Domino’s pizza.

“Trustable information”.  Information is data that makes a difference – it sheds light on a situation, it enables action, it helps attain desired outcomes. One way companies can contribute to customers and the wider community and thus build trustability is through sharing data and/or information that is held by the company.   What is often just data within a company, if released to a wide community in a usable format can be turned into information.  That is the key point of this chapter, Don and Martha gives some examples.

“Designing trustability into a business”.  This chapter completes the conversation, the story and Don/Martha do so by exploring what trustability would involve in various industries – mobile operators, financial services, automotive, airlines, enterprise computing…..

Why I have gone to all this effort to write this review?

Extreme Trust deserves to be read.  It opens up a new domain, a new conversation, a conversation that needs to happen.  Why?  Until this conversation happens, this domain is addressed, pretty much all the money spent on Customer initiatives is wasted.  Why?  Because the ‘elephant in the room’ is not being addressed and addressing that ‘elephant in the room’ is the key to cultivating genuine affection and customer loyalty.   I want to leave you with the parting words of Don and Martha in Extreme Trust:

“In the final analysis, it is almost certain to be the new companies and the start-ups that employ these tactics to overturn the old way.  They have less invested in the current paradigm, and less to lose by destroying it.  Gradually, they will use trustability to transform our entire economic system, in the same way that interactivity itself has so dramatically transformed our lives already.  They will deploy honesty as brutally efficient competitive weapon against the old guard. 

As standards for trustability continue to rise, the companies, the brands, and organisations shown to lack trustability will be punished more and more severely…..

For my part, I am keen for this future to turn up sooner rather than later – the thought occurs to me that this is a future worth operating from and living into.  How about you?

How much do you really know about your customers? 5 areas to look into

How much do you really know about your customers?

If you are going to create superior value for your customers through the Value Proposition and the associated Customer Experience then you need to have sound insight into the lives of your customers.   Which is why in my model Customer Insight, Value Proposition and Customer Experience are interlinked.

How much do you really know about your customer?  Allow me to be more specific – how much time, effort and emotional investment have you made into stepping into and living the lives of your customers?  Have you even spent a day walking in their shoes seeing what they see, hearing what they hear, experiencing what they experience and possibly thinking and feeling what they feel?  What kind of insight would be available if you were to step into the customer’s shoes and live their life for a week?  Who in your organisation had done that even once?

Word are easy, deeds are harder.  My experience is that few organisations truly understand their customers because it is still rare for people within the organisation to walk in the shoes of their customers and experience the world through the minds and bodies of their customers.  Yet, this is exactly what is needed if you are to come up with both the insight and the emotion around that insight that inspires you to make the changes that will create value for your customers.

Shifting from an organisation-centric mindset to a customer-centric mindset

The more I dive into Customer Experience and Customer-Centricity the more convinced I become that what we are really taking about is business model innovation (including leadership, culture, mission & strategy) – the outer ring of my Create Superior Value framework (the first diagram in this post).  As such I wish to share with you a table that I adapted from Osterwalder & Pigneur’s book:

Conclusion

Shifting from a company-centric to a customer-centric mindset can be remarkably difficult – most people live and breathe the organisation so their natural, taken for granted, way of being, seeing and doing is company centric.

Only those people who have a strong enough reason (competitive forces) or a strong desire will step into the customer shoes and by doing so they will shift their perspective from company-centric to customer-centric.  Therein lies the opportunity: to come up with novel insights that are simply not available to those looking at customers from afar with industry/company coloured telescope.

What do you think?

giffgaff: where customers are ‘members’ who sit at the heart of the organisation

What makes giffgaff special – worth learning from?

Some customers love giffgaff so much that they are willing to have giffgaff tattooed on them.  If this does happen then it puts giffgaff in the same league as Harley Davidson and Apple – brands that have fans not just customers.   giffgaff won the Marketing Society’s 2011 best new brand award . And in the customer management community some hail giffgaff as representing the future of customer service.  So what makes giffgaff special – different from the pack?

First let me tell you a little bit about giffgaff.  Vodafone, O2, Orange, T-Mobile, 3 – are the main brands that dominate the UK mobile telecoms industry.  giffgaff is an MVNO (mobile virtual network operator) that launched towards the end of 2009 and piggybacks on the O2 network.  And in that sense giffgaff is rather like Virgin Mobile (the first commercially successful MVNO in the UK) and say Tesco Mobile.

So what makes giffgaff special?  It is not one thing, one ingredient, it is the entire recipe – the whole business model and organisational design.  In a way it is like the way that Dell (at the start) rethought the PC industry or Ryanair / Easyjet / Southwest Airlines rethought the airline travel industry.  Let’s start with customers.  It would not be too much of a stretch to say that giffgaff does not have customers – at least not in the traditional sense of customers simply as consumers.  giffgaff has members.  Customers are seen as members who are involved in, contribute to and carry out an array of organisational tasks: provide ideas, get involved in new product development, recruiting new members, serving other members (‘customer services’)……  Many pundits talk about putting customers at the heart of the organisation yet few organisations do that – giffgaff is an exception.  There is a lot of talk about transparency, authenticity, mutuality, collaboration and co-creation yet few organisation do that – giffgaff is an exception.  Finally, giffgaff is keenly focussed on its core customer segment (those looking for a great SIM only deal) and the associated value proposition (cheap calls, texts, internet).  If you want to find out more about giffgaff then I suggest you listen to Tom Rainsford, Head of Brand and Proposition, giffgaff.   For the rest of the post I simply wish to share with you my experience of dealing with giffgaff and why I am an advocate.

My giffgaff customer experience

To sign up with giffgaff you have to head over to their website as giffgaff is an internet only operation: there are no retail stores to visit nor call centres to ring.  The first thing that I noticed was that it was easy for me to sign-up and request a SIM: the task was prominently signposted on the webpage and the task was easy as I only had to supply my name, email and address – five fields in total.

Second, I noticed that giffgaff is great value for people like me – people who already have a phone and are happy to keep using that phone.   On Orange, as a pay as you go customer, I had been paying 20p+ a minute and 10p for text messages.  With giffgaff I would be paying only 8p a minutes for phone calls and 4p a text.

Third, despite the fact that I knew absolutely nothing on phone unlocking, all the information that I needed to get my phone unlocked was on the website.  Better still upon entering the make and phone model the giffgaff website provided a list of companies that are able to unlock my phone.  And each of these companies was rated so I could just turn to the best rated one. 

Within two days I received the SIM card and it was easy to register my SIM card: I simply logged into my giffgaff account, entered a six digit code and then purchased a £10 goody bag that bought me 250 free minutes, unlimited texts and unlimited internet.  Within 30 minutes my SIM was activated and I was making calls and surfing the internet.  The process could not have been easier.

In the process of purchasing the goody bag I noticed that the giffgaff website had an automated top-up facility.  I simply had to activate and specify how much I wanted my top up to be and when the balance on my account hit a low of £3 giffgaff would automatically top-up my account thus making sure that I was never in a position where I had run out of credit and thus could not use my phone.  This grabbed my attention because that was one of the tasks that I hated doing on Orange: topping up my phone and the phones belonging to my two sons.  I still cannot believe how such a small feature delivers such a huge benefit to me: always being able to use my phone and giffgaff doing the work behind the scene.

Whilst I was using the phone I got more suprises in the form of useful information: the giffgaff network regularly displays how many minutes I have left if I have bought a gift pack (a bundled package that expires at the end of 30 days).  If I have bought ordinary minutes then giffgaff lets me know how much credit I have left at the end of calls.  Finally, when I make calls to other giffgaff phones then the giffgaff network automatically informs me that the call was free.  This is the kind of information that I had yearned for and never got from my previous provider.  And it got me thinking: if giffgaff can do this then why did my old provider not do this?

About two weeks later I got another pleasant surprise: an email from giffgaff letting me know that they were sending me an additional SIM card that I could give to a friend.  And on the same day it arrived.  When I opened up the envelope I noticed that I was not simply being asked to get a new customer for giffgaff.  giffgaff had thought through the value exchange: once the SIM was activated then the person using that new SIM would be credited with £5 and so would I.  So I was being rewarded for my effort.  How could I refuse?  My wife switched over from Orange to giffgaff.  And she is delighted with the money that she is saving and how easy it is for her to manage her mobile account/relationship with giffgaff.

At the end of the month I was able to view an analysis of my phone usage via the giffgaff statement.  This took me by surprise because on Orange I simply got a list of phone calls I made chronologically.  On the giffgaff site I got that and I got a bar chart type analysis which I found useful – it helped me to figure out what I had been doing with my phone.  I was surprised and delighted by the thoughtfulness of it: giffgaff is providing me with information and tools that help me to be informed and make better decisions. 

Interestingly enough giffgaff beat me to that as well.  Shortly after this experience I got an email from giffgaff telling me that they had done an analysis on my usage and had a recommendation for me.  So I logged on the website and accessed that recommendation.  The recommendation itself was no surprise but the fact that giffgaff was doing this was and is a delight.  It was something that I had wanted from my previous provider and yet was never able to get.  As a consultant I had advised a major mobile telco to implement this practice, as this telco wanted to improve the customer experience, yet management refused because it would have an adverse impact on revenues and profits because most customers were on tariffs that were too high and costly for them.

Now this might not sound like a big thing and yet it is to me: the language that giffgaff use is a human one and that really connects with me.  The other day I got a SMS message which delighted me both because it was unexpected and because of its simplicity.  Here it is “Thanks for helping to grow giffgaff, you’ve earned ….so far. For more information and to check your recommended plan see My giffgaff at giffgaff.com, cheers!”  I have recommended more than once the companies and marketers use a human language that speaks to connects with customers – that is something that giffgaff is doing rather well.

Finally, I recently took my phone to France and got another pleasant surprise.  On landing the mobile connected to a French network and up came useful information from giffgaff.  I cannot remember the exact words yet the message was clear: we don’t want you to have any unpleasant surprises so lets make clear how much your mobile calls are going to cost.  I was told that I would be charged 38p per minute if I was making the calls and 15p per minute if I was receiving calls.  This is the kind of honest, proactive, information that I have always sought and never got from previous suppliers (mobile networks).

Why am I a giffgaff advocate?

I am adding giffgaff to the list of companies I recommend.  Why?  Simply because they have made my life easier by taking hassle out of it (e.g. automating topping up), provide me with useful information (how much credit I have left, how many minutes I have left, how much calls are going to cost…), talk to me in a human way (the simple friendly informal language), provide more value for money (cheaper calls, texts, internet..), reward me for the contribution that I make to giffgaff and the call quality / network coverage is as good as that provided by my previous supplier (Orange).  Finally, I prefer being called/treated as a ‘member’ rather than a ‘target’, ‘consumer’ or even ‘customer’.  How about you?

Why culture is the ‘Achilles Heel’ of your customer experience efforts (Part II)

This post concludes the train of thought that I shared in an earlier post – Why culture is the Achilles Heel of your customer experience efforts (Part I). – I encourage you to read it to get the most out of this post.

Let’s forget morality and focus on ‘workability’.  By ‘workability’ I am addressing the pragmatic dimension.  For example if you want to fly a 747 from London to New York you simply need an airworthy aeroplane, the right fuel, experienced pilots, the right staff etc – these are the conditions of workability for the flight.  If you do not have these in place then your plane may get off the ground but it is highly likely to make it to New York.  So what are the conditions of workability for a customer-centric orientation that builds customer loyalty?

The foundation of customer loyalty is earning and cultivating trust

In a world full of suppliers who offer pretty much the same goods who would you choose to do business with?  If you are like most of humanity then you will instinctively do business with the one that you trust the most. Don Peppers & Martha Rogers have taken a good look at the whole trust thing in their book ‘Rules to Break & Laws to Follow’.  So allow me to share their wisdom with you.  Here are the laws that they recommend that you follow:

1. Earn and keep the trust of your customers

The key point I want to stress here is the word ‘earn’.  Yes, you need to earn it by doing the right thing (honest, fairness, integrity) as well as doing things right (competence, ease, access, efficiency…).  It means paying as much attention to the social and moral aspects as it does the economic aspect. Are you a fit and proper person/organisation?  Which is another way of asking: can you be trusted to act honorably/ethically?

2. Really taking your customer’s point of view means treating each customer with the fairness you would want if you were the customer.

At a philosophical level you can look at this either through John Rawls veil of ignorance or refer to some of the oldest philosophies used to guide human relations.  Using the lens of the ‘veil of ignorance’ ask yourself how would I design the system (roles, rules, interactions….) if I did not know if I would end up playing the role of the customer or the enterprise?  I used to use this with my two children when they would quarrel over cake: one of them got to cut the cake into two pieces and then the other one got to choose (first) which slice he wanted.  This system ensured fairness.

If we turn towards the world’s great religions then with Christianity you have the Golden Rule.  Rabbi Hillel when asked about the Torah replied “Do not do unto others that which is hateful to you, the rest is merely commentary.” Confucius stated “What you do not wish upon yourself, extend not  to others.”  Mohammed said “None of your truly believe until he loves for his brother what he loves for himself.” And in the holy book (Mahabharata) of the oldest religion (Hinduism) you have “This is the sum of duty: do naught unto others what you would not have them do unto you.”

At a practical level it means taking off your shoes and walking the shoes of your customers.  It means experiencing how it feels to pick a mobile phone plan when there are so many to choose from, so many conditions, so many variables?  It means experiencing what it is like to set-up and use the product with instructions that occurs as being useless?  It means experiencing what it is like not to be able to get hold of  helpful human being when you have an urgent need and having to navigate a ‘hard to make sense of’ IVR and so forth.  Not reading a report about it – actually experiencing it by doing it for real.

Don and Martha say it best when they write:

  • Honestly taking the customer’s perspective is really at the heart of understanding the customer’s experience with your brand or product.”
  • “…the very concept of being trustworthy that the company will not be acting solely in it’s own short-term interests.  On one level, this might involve simply giving a customer a fairer deal than she would otherwise have know about.  Or it could mean providing the information to allow her to compare competing offers directly – your competitors best offers included. It might mean being completely open with the customer when talking to her about the merits of buying a product or service….”

3. To earn your customers’ trust, first earn your employees trust.

Your employees can be the source of customer insight, competitor intelligence, ideas, creativity, innovation and judgement.  They are also the source of flexibility: they can judge the situation and respond appropriately.  And there is world of difference between giving the minimum and put our ‘heart and soul’ into your work.  The difference is called ‘discretionary effort’.  Tapping into it is like tapping into an inexhaustible gold mine.  Still not convinced?  Name one technology, one artifact, that has not been ultimately created by a person or persons working as a group.

If you want your employers to treat your customers well you have to model that behaviour: you have to treat your employees well.  In services heavy industries (such as retail, telecommunications, hotels & leisure…) your employees are absolutely critical to any form of service excellence.  To earn the trust of customers you absolutely have to earn the trust of your employees.  You do that by treating them well:  the ‘veil of ignorance’ and the Golden rule applies just as much to your employees as it does to your customers.

You would be wise if you were to apply this ethic to your suppliers and your partners.  I have been a supplier of professional services for most of my working life and my teams have given our all to those clients who have practiced the golden rule.  The rest – we stuck to the contract and did the minimum we had to do.  When disaster strikes your suppliers/partners can be your saviours or the source of your ultimate destruction: more than one company has experienced this.  When disaster struck Toyota survived because it’s suppliers did the right thing because Toyota had a history of doing the right thing by suppliers. In the UK I once heard the CEO of the best known Indian food company share (emotionally) how his suppliers pitched in to save his business when his only manufacturing facility burnt down overnight. Why?  Because he had treated them honorably.

4. If being fair to customers conflicts with your company’s financial goals, then fix your business model or get a new one.

To cultivate customer trust you must put in place a culture that calls everyone in the company – each and everyone – to genuinely consider your customers perspective and well being in each and every decision that your company makes.   Here is how Don and Martha put it: “Whenever your employees are solving a problem or undertaking an initiative, at some point they should ask themselves the question: What’s in the customer’s interest here?” And you have to act on that interest.

If we are truthful then it is highly unlikely that you have this culture today.  Your challenge is to create that culture; your biggest obstacle is likely to be the Tops, your business model and short-termism.  If you company does not create that kind of culture then you are leaving the field wide open for new entrants who build a business model around treating your customers fairly, cultivating their loyalty and reaping the benefits: think Netflix v Blockbuster (late fees) or Google v Yahoo! or Zane’s cycles v other bike sellers.

Final words

Archimedes said “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.”

Culture is the lever and the CEO (as leader) is the fulcrum:  if you have do not have the right leader and the right culture then despite your best efforts you will not succeed in cultivating customer loyalty and harvesting the benefits. At best you will win minor battles like reducing customer service costs or improving the ROI of your marketing campaigns. And in the process of seeking ‘customer gold’ you will simply make the pick axe and shovel sellers rich.

Are you confusing marketing focus with customer focus?

Here is what the latest Forrester reports says on loyalty schemes

I just read a piece by marketing week that discusses the key findings of the latest Forrester report on customer loyalty schemes.  Here are the key points that speak to me:

  • “The problem is that many brands fail to set long-term objectives for their schemes and are too focused on immediate sales and customer acquisition.  Instead they need to look beyond tactical activity and study what is driving customer value.”
  • There is little differentiation, poor communication and promotional support, while many programmes are not integrated with the sales cycle or in sync with branding;
  • There are also problems with measuring results and targeting the same consumers too often;
  • The drive for loyalty should fuel a brand’s entire marketing strategy; and
  • Loyalty must be earned and is usually the result of a series of compelling brand experiences which the consumer enjoys over time.

This got me thinking why so many marketing heavy organisations fail to embody customer focussed behaviour.  Is it possible that over the last ten years these organisations, or their marketing functions, have learned little?  Or is it that these organisations and their marketers confuse a marketing focus with a customer focus?

Here is brief reminder of the characteristics of a marketing focussed organisation v a customer-focussed one.

Characteristics of a marketing focussed organisation? 

I had the good fortune to work within a marketing focussed organisation (International Distillers & Vintners) some years ago and since then I have done some consulting to such organisations.  Here are the key characteristics that I have distinguished:

  • There tends to be strong belief that the organisation can prevail through bigger marketing budgets and smarter marketing despite any shortcomings in the product, distribution channels and customer relationships;
  • tendency to assume that they are in tune with customer needs and priorities yet when you dig under the surface what you find is that the ‘research’ is deeply flawed and in effect leads the ‘witness’ to provide the answers the marketers want  – even if this is at a subconscious level;
  • tendency to collapse marketing campaign success with success in cultivating customer relationships, customer value and customer loyalty.  In doing this they ignore the impact on the 80+% of customers that did not respond to the campaign because they did not find it relevant.
  • tendency to be blind to the totality of the customers experience with the organisation e.g. across business divisions, product lines, interaction channels and during the after-sales part of the customer journey;
  • the marketing function has little interest and/or power to shape and influence the customer experience across all the interaction channels and touchpoints. And no-one else is doing that either.

Characteristics of a customer focussed organisation

There are a lot less customer-focussed organisations yet there are enough of them to distinguish some of their defining characteristics.  Here are the ones that are key for me:

  • There is clarity on which types of customers the organisation is best placed to serve well and effort is made to select only those customers to ensure fit and minimise disappointment on the customer side and ‘waste’ in the organisation in terms of returns, disputes, complaints, bad press etc;
  • The business model is centred on retaining customers, cultivating customer loyalty and getting a bigger share of the customer spend;
  • The leaders personally identify and embody the customer-focussed philosophy and this is obvious to the people the work within the organisation and to the customers;
  • The senior management devote considerable organisational resources (including their time) to uncovering customer needs, segmenting customers by their needs and then coming up with and delivering propositions that create superior value for these customer segments on an ongoing basis;
  • A way of speaking and doing things that puts the customer and cultivating customer relationships at the heart of the business;
  • Hiring managers who have an affinity for people and can inspire the best of their employees by providing the employees an environment in which they feel appreciated, supported and rewarded for doing things that make the right impressions on customers;
  • An organisational design that recognises the need to structure around customer segments as much as product families and functional silos; and
  • Technology platform that enables the employees to anticipate and respond quickly and correctly to customer needs.

Making the transition from marketing focussed to customer focussed

When you look at the characteristics how do you feel about making the transition from marketing focussed to customer focussed.    Do you wonder if you can pull it off?   Does it occur as being hard, messy, painful and risky?  It is.  For existing organisations it requires transformation as in the caterpillar into the butterfly.  And that is why it is easier to pretend you are customer focussed whilst actually being marketing focussed!  Which in turn leaves the field open to leaders that ‘Feel the fear and do it anyway.”

What do you think?

What the Customer Experience community can learn from Build A Bear

Most retail experiences are dull: bland, bland, bland

Do you find most retail experiences simply dull?  I do.  Most of the time that I walk into retail stores I am left totally unimpressed.  The retails stores all collapse into one heap of blandness: one mobile phone store is just like another – the only difference is the brand name; one games  retailer is like another one; one PC store is like another and so forth.  Yet in this ocean of blandness I have come across a company that stands out: Build A Bear.

Build A Bear have reimagined  and reinvented the Customer Experience

The folks at Build A Bear have reimagined the entire bear purchasing and ownership experience.  When you turn up at a Build A Bear store you are greeted by smiling sales assistants and lots of colour – the store is alive and it draws you in especially if you are a child.  Once in the store you cannot simply go to the shelves, pick up a bear, pay and leave.  That would be dull and you would just be like every other shop selling bears.

Instead you are invited into a process where you create your very own, personal, bear.  The shop assistant invites you to select the bear skin.  Then you move on and select  the audio that you want inserted into you bear. Once you have done this ( or chosen no audio) you go with assistant and sit in front of the machine that stuffs and stitches your bear right in front of you.  You decide how much stuffing goes into your bear – depending on whether you want your bear on the softer side or more on the firm side.  Whilst you are making the bear the sales assistant invites you to choose a name for your bear.  After all the bear is your very own special friend that you are going to share your life with, not just a toy!

Once you have made your bear and chosen his name, the sales assistant shows you the section where there are lots of different outfits.  And being a child you absolutely go crazy and select school outfits, party outfits, sports outfits, night clothes and so on.  This is usually where the parent steps in to ‘help’ the child to select only one or two outfits.  When you’re ready you go to the counter and pay.  Here you are met with another surprise.  The cashier hands you a birth certificate for your bear: in my daughters case Meemoo was born in the early days of January 2011.

Just when you think you have seen and experienced it all.  The cashier places your bear into a cardboard house – one that you can decorate when you get home – and tells you that once you get home you can go and log onto the Build A Bear virtual world on the website.  And when you get home that is usually what you do or ask your parents to do.  Once you are on the website you can do more fun stuff: you can make your very own bear come alive with the outfits you bought in the store.  If you want to do more on the website then you have to go and buy more outfits from the store.  And that is exactly what my daughter does.   That is how Meemoo ends up being loved when the other thirty odd bears sit on the shelves neglected.

What is the lesson for the Customer Experience community?

Customer Experience is much more than complaint management.  Customer Experience is much more than simply improving customer interactions.  Customer Experience is much more than better service.  Customer Experience is much more than a better product.  In its fullest sense, Customer Experience  is doing what Build A Bear does: taking the ordinary and making it extraordinary by engaging the customer in co-creating an immersive and enjoyable customer experience.

It is worth noting that Build A Bear has not just reinvented the customer experience,  Build A Bear has reinvented the business model as well.  The accessories prolong the relationship with the customers (the children come into the stores regularly to buy new outfits) and drive the majority of revenue, profits and customer LTV.  Put differently, you never have to sell another bear to your customer, you can just sell the accessories.