Is There Any Real Value In Customer Experience?

The genesis of this post lies in the following article: Is Customer Experience Manageable? An Industry Pundit Says No. In reading this article and listening to the embedded interview I was struck by the importance Esteban Kolsky attached to defining Customer Experience clearly. In fact Vala Afshar, the author of the post starts with the following statement:

“What is customer experience (CX)? To get customer experience right, companies need to first get the definition of customer experience right, according to an enlightening talk I had with Esteban Kolsky,…

How important is it to clearly define Customer Experience?

Think of a tree. Ask yourself if any definition of tree fully grasps and discloses tree? Can you come up with a definition that will clearly point out the entity tree to someone who has never seen-experienced tree – say a Martian?

Think of service. Ask yourself if any definition of service accurately captures, discloses and exhausts service?  Furthermore, ask yourself what use a definition of service is, to a being that has not experienced service?

Consider that the definition, any definition, discloses little about the phenomena and/or entity as it is in itself. Consider that the definition discloses he who is doing the defining. In particular, it discloses his/her worldview, understanding and interests.

Getting back to Customer Experience, consider that it is not possible to get the definition of Customer Experience right. Further, consider that even if it was theoretically possible to arrive at one  accurate-precise definition of Customer Experience, this definition would not yield any practical value.

What did the distinction CRM bring into being which was not already present?

I invite you to take a look at CRM as a distinction. What arrived on the scene with the arrival of CRM as a distinction. I say that the following arrived:

Customer lifetime value – looking beyond signing up a customer, or effecting a single transaction, and seeing, perhaps for the very first time, the economic value of the customer over his/her lifetime.

Treat different customers differently – using one’s understanding of each customer’s needs-wants-preferences and her lifetime value (£/$) to tailor one’s products, propositions, communications, conversations, and interactions so as to create superior value for the customer and the company.

The learning relationship – using each customer conversation and interaction to enrich the company’s understanding of the customer AND enriching the customer’s understanding of the company. Thus enabling the company to become better at ‘treating different customers differently’ and increasing the ‘customer lifetime value’.

Now here is the joke and it is not funny. Most organisations in the rush to embrace CRM technologies did not fully get present to and hold on to these powerful distinctions. Instead they rushed to automate to reduce costs or do what they were doing faster. Or they used CRM technologies to effect more control over their staff so enabling micro-management. Or they used CRM technology to bombard with personalised marketing messages that did not show up as personal to the customers. Or they started on the path of single customer view – many still have not arrived there.

Then there is Chris Zane of Zane’s Cycles. He attended a conference (according to him in his book Reinventing The Wheel) and heard a speaker share the concept of customer lifetime value. Chris, seized by the world opened up by this distinction, of taking the longer term orientation (maximising customer lifetime value), altered his way of doing business so as to maximise customer lifetime value. And as a result has built a great business.

What does the distinction Customer Experience open up which was not present before?

What arrived on the scene with the arrival of the distinction Customer Experience? It occurs to me that the following arrived on the scene either present for the first time or moved from the background (where it was hidden) to the foreground:

Customer Experience as ‘product’ and differentiator in itself – this was the central assertion of Gilmore and Pine in their book The Experience Economy. When I think of this I automatically think of Build A Bear and Apple with the launch of the iPod, iTunes, iPhone, iPad, iPad – the entire ecosystem.

Enter into the customer’s world and experience it as she experiences it – think of this as ‘walking in the customer’s shoes’ in the broadest sense not in the narrow sense of what it is like and how it feels interacting with your organisation. This broader sense of ‘walking in the customer’s shoes is the access to surfacing the customer’s unmet needs and thus the source of lucrative new revenue streams. This moving-enlightening-human video point towards that which I am pointing at here.  And at the same time it only gets us somewhat towards the destination that I am pointing at here. I read the other day that a huge industry – prepared and packaged salads – was created when someone figured out that folks in the USA wanted to eat salad and did not do so because they were not willing to do what needed to be done to put the salad together.

Experience your organisation as your customer experiences your organisation – this is what I call the narrow sense of ‘walking in your customer’s shoes’. How does the customer experience your organisation: your company, your brand, your products, your people, your processes? How does the customer experience your marketing, your selling, your service, your billing, your return policy, your charges…? United Breaks Guitars is the classic illustration of this. Undercover Boss at it’s best shows the Tops getting to the front lines and getting some access to how the customer experiences the organisation.

Emotions – pay attention to human emotions. Every conversation, every contact, every interaction will call forth human emotions. Emotions lie at the root of ALL decision making! To shape human decisions focus on and influence-shape human emotions.  The best way that I can explain this is by sharing what my wife said with such gusto “I love my iPad!”.  This is coming from a woman that hates computers and did not want the iPad to start with. Now she is using it throughout the day, every day. Through her enthusiasm she has influenced her father to buy an iPad and her mother to buy a Mac for the first time in her life.

My advice

Forget definitions of Customer Experience. Leave that to the people who make a living out of defining and arguing about definitions. Instead follow in the steps of Amazon (Jeff Bezos), Apple (Steve Jobs), Zane’s Cycles (Chris Zane), UCLA (Dr Feinberg), Zappos (Tony Hsieh): explore and live the distinctions that are unconcealed and opened up by Customer Experience. Or don’t. As always the choice to take the road less travelled will only be taken by a brave few. That is OK. The death of the old gives space for the new to flourish. And when the new flourishes the old dies. Think of Nokia, think of Apple.

I thank you for listening to my speaking. I continue to be drawn to share that which I share by those of you who continue to subscribe to this blog. I wish each and everyone of you the very best.

A brief (personal) point of view on the state of customer-centricity

Is it possible for a man/woman to have a lot of wealth and do lots of stuff that generates wealth and yet for that man/woman to be ‘not wealthy’?  If you read that without pausing for thought you might say “That is nonsense, he’s gone nuts!”  I am not going to argue the point with you.  I simply ask you read that again.  Now I pose a related question: is it possible for a man/woman to have no wealth and yet be wealthy?  Before you answer “No!” I ask you think about the tales travellers tell about the remarkable hospitality and generosity of the poor – who happily share the little that they have.

Now I am ready to share my observation on customer-centricity with you.  As I look at the world of business and especially all things Customer I am stuck by the following:  just about everyone wants the fruits of customer-centricity (higher revenues, higher profits, higher profit margins) and plenty of organisations are doing lots of Customer stuff (customer insight, customer engagement, customer experience, CRM, customer strategy, customer marketing…) yet remarkably few are actually BEING customer-centric at the level of the organisation.

Does that matter?  Yes it matters a huge amount.  In zen there is the concept of “effortless effort” or “actionless action”:  being customer-centric (starting with the Tops) is the source of this “effortless effort”.  Does this strike you as a bit abstract.  Think about it this way: when you genuinely care that caring effortless expresses itself in the most appropriate way in the circumstances at hand.  On the other hand if you do not care then you have to go to a lot of effort to learn techniques to come over as being caring and hope that the other person does not notice.  The issue is that this tends to wear you out (pretense takes its toll).  Also the mask tends to fall off when you are under pressure.  Finally, the persons on the other end aren’t always taken in by the techniques – there is certain quality that comes across with genuine caring.

Take a good look at people like Chris Zane, Tony Hsieh, Jeff Bezos, Howard Schultz and Steve Jobs – you might find that their BEING is or was the ‘difference that makes/made the difference’.  When I read about the transformations that Howard Schultz and Steve Jobs brought about in their organisations I am struck by their BEING – as human beings, as professionals, as CEOs and as leaders.  They bought a certain quality to their organisations that set their organisations alight – to create and deliver stuff that enriched the lives of their customers.  People who did not want to play that game left.  The people who stayed were the people who were up for playing the game that these guys orchestrated: customer-centricity, excellence, customer experience…

Incidentally, BEING customer-centric at the ORGANISATIONAL level is the source of superior performance.  I stress the importance of the organisational component:  think how easy it is to snap a twig, not put a hundred twigs together (aligned) and snap them – hard isn’t it.   Yet even this is sometimes not enough – sometimes change comes along (economic, regulatory, new competitors) that so changes the playing field that the dominant players stumble.  Think of it as the fire that tears through the forest and gives life to the dormant seeds.  Even Apple will one day lose its crown just like Tesco is on its way to losing its halo of invulnerability and customer-centricity through data mining. If you have not heard of Tesco then it worth knowing that Tesco has been the dominant grocery retailer in the UK for many years.  Its success was put down to the loyalty card and the way that data was used for segmentation, customer marketing and product selections at Tesco stores.  This Christmas Tesco has stumbled signficantly.

Want a breakthrough in customer-centricity? CARE, deeply

In the West we are taken with that which is visible (the surface phenomena that can be detected and measured) that we lose sight of that which gives rise to the visible (the invisible).  In my last post I disclosed one aspect (Integrity) of the invisible that makes a huge difference to the workability and performance of our lives, our organisations and the impact (customer experience, loyalty or otherwise) we make on customers.  In this post I want to look at another dimension that is critical – to workability, performance and experience – and which is hidden from view and often neglected in organisations: CARING.

CARING is an invisible quality that we bring or do not bring to everything that we do – from something as simple as saying hello to something as complex as creating a harmonious prosperous society – as individuals, as groups, as communities, as organisations and societies.  There is noticeable difference in QUALITY in the level of caring behind a simple “Hello”.  That difference in quality is picked up and experienced by the Customer.  This difference is also present for the person who is communicating with / being of service to the Customer.

The CARING (or the lack of it) that has been put into the design of an office building in present – as an experience – even if this experience cannot be expressed adequately verbally and often it cannot:  the people working in the building know if they are cared for or not.   The CARING (or the lack of it) that has gone into designing and manufacturing products is experienced by the people who touch and are touched (or not) by these products.  The CARING (or the lack of it)  is present in the design of websites – some websites occurs as being useful, easily usable and even inspiring at a deeper level and others do not have this experiential impact. CARING (or the lack of it) shows up in business policies – some policies give rise to phenomena that leave us (as employees, as partners, as suppliers, as customers) moved, touched and inspired so much so that we find ourselves thankful that these organisations exist and we willingly give our loyalty without thinking about giving our loyalty: loyalty simply shows up without conscious effort or decision making.  The CARING (or lack of it) is experienced through the business processes – some make it easy for the Customer to get his jobs done, others make it difficult – even impossible.  The CARING (or lack of it) shows up in the technology that is implemented and how it is implemented.  The people and organisations that CARE ensure that self-service technology is easy to use, that it makes customer lives simpler, richer, easier and they take the time and make the effort to educate/train customers in using that technology.  Many people and organisations do not CARE enough and so use technology badly – the technology occurs as a pain for customers and often staff.  Just go and take a look at the technology that many call-centre agents have to use under intense time pressure – most of it makes the lives of the call-centre agents hard and stressful rather than help them to do their job quickly and professionally.

When CARING is being put into the game of business it shows up in the form of policies, products, service, solutions, processes, technology, people etc.  When CARING shows up in phenomena it is picked up and experienced by: all the people in the business (leaders, managers, back office staff, front office staff); all the people who serve/supply the business; and all the people who interact with and buy from the business.  When CARING is experienced by Customers then ‘customer loyalty’ simply shows up: customers find themselves being loyal (as evidenced by their behaviour) without any thinking on their part on whether to be loyal or not.  Customers are people – not rational machines – and they are hard wired to behave in certain ways.  As human beings living in a uncertain (even dangerous world) we want to / need to believe that we live in a benevolent world.  CARING shows up as phenomena (e.g. keeping promises,  products that do what it says on the tin, apologies and restitution for poor service….) that make us feel that we live in that benevolent world – something that we want so much. Don’t believe me?  Take a moment and experience what your living would be like if you were not able to trust anyone and really did not know what was around the corner – no certainty and danger everywhere.  How long would you want to live like that?  What would your stress levels be like?  What would it be like – the experience – of being around you?  How rapidly would you age?  How long would you live?  What would be the quality of your life? I doubt if it would be anything other that wretched.  CARE is the difference between a wretched and a joyous existence.

There is no escaping CARING.  As human beings we bringing CARING or the lack of caring to everything – absolutely everything.  And that CARING shows up in all the phenomena that we can experience with our five senses and with our sixth sense – sensing what we sense but without being able to put our finger on it and certainly we cannot point to the commonly agreed upon five senses.

If you want to breakthrough in customer-centricity then CARE deeply.  Who can I point you towards so that you can see what I am pointing towards.  Steve Jobs – he cared deeply about ‘putting a dent in the universe’ and about ‘the customer experience’, beauty, simplicity, flow and great design.  He cared so deeply that he refused to compromise – to go with second best even if that would have been more than enough for staff, distributors, customers, the industry pundits, the stock market.  Jeff Bezos – he is stated that his intent is to make Amazon the earths most customer-centric company.  He means it and to that end he plays the long game – making sacrifices today – again and again – to act in accordance with and realise his dream, his intent.  Tony Hsieh – his intent is captured in the simple saying ‘Delivering Happiness’.  Chris Zane of  Zane’s Cycles – read “Reinventing The Wheel” and you get clear that Chris CARES deeply about: the community he lives in, the customers he serves, the people that work for him……James Dyson – cared deeply enough about his ideas for the vacuum cleaner that he risked everything and many years in inventing the bagless vacuum cleaner and today his business is a roaring success. Julian Richer of Richer Sounds cares deeply about what the business is about (the products, the service, the people who serve the customers, the customers themselves) and so Richer Sounds has some of the highest sales figures per square foot of retail space and more and more Richer Sounds stores blossom over the UK.

Do you CARE so deeply that anything less than perfection leaves you feel dissatisfied, in pain?  If not then you do not CARE deeply enough and that means that the arena is wide open for someone that does to reinvent the ‘playing field’ and thrive – most likely at your expense.

Hint:  you cannot CARE deeply enough about a product, a proposition, a mission, an organisation that you are not proud of.  That is simply what is so:  at best you will operate at the minimum level that you need to get by.

What do you think?  Heck if you disagree or you have a different point of view then share it with me – educate me, I am open to being challenged and educated.

How to profit by taking on more of your customer’s risks

What is the core of the human condition?  If you dig down deep enough you might just find that most of us feel vulnerable and strive for security.  In our social lives we minimise our vulnerability and build up our sense of security by cultivating relationships with people we can trust.  In our business lives we strive to do the same: do business with people and organisations we can trust.

One of the major causes of us feeling vulnerable is uncertainty.  Uncertainty makes us feel uneasy: it exposes us to risk and most of us are risk averse.  Research studies show that most of us will pay a premium to minimise risk – to outsource it to someone else.  The entire insurance industry is founded on this understanding.   Chris Zane has built a successful cycle business through a deep understanding of this principle: he provides a lifetime guarantee!  Zappos have flourished by exploiting this principle: their generous returns policies take the risk (and cost) out for customers.  In return customers happily pay a premium.  This is the reward these companies earn for taking risk out of their customer’s lives.

What am I saying?  People buy products.  People buy services.  People also buy security: peace of mind.   You can build stronger bridges with prospects and customers by taking out risk and replacing it with peace of mindAnd you can make more money!

If you are inspired to provide this peace of mind then might want to make use of some of the insights that Ernest Dichter, consumer behaviourist, came up with back in the 1950s.  He identified that there are at least five dimensions of risk every time someone makes a purchase:

  • Economic – am I wasting my money making this purchase?
  • Functional – will this product work reliably?  Will I get the quality of service I am being promised?
  • Social – what will other people think of me in buying this ‘product’ and doing business with this company?
  • Physical – will this be painful?
  • Psychological – will I think poorly of myself?

When you think about it this way you can get why quality and reliability make such a big impact on customers: quality and reliability makes your customers feel safe.  You can see why good design commands a premium: good design makes us look good in our eyes and in others eyes.  You can see why price counts and why people search out deals: it makes us feel intelligent and good about ourselves.  In the current economic climate price is particularly important as it also gives us bragging rights. 

Now let me ask you two questions.  In your customer experience design efforts what are you doing to take out these risks?  Does your customer strategy make use of risk as a key leverage point?

Do you really want to get to grips with customer-centricity? Then read ‘Reinventing the Wheel’ by Chris Zane

Does your map correspond with ‘reality’?

We never live in the ‘real world’.  Each of us lives on our own personal map of the real world; groups live in their map of the real word; and cultures are deeply enmeshed in their cultural map of the real world.  To the extent that these maps are a good with the ‘real world’ then our actions produce intended results.   If you twist this around then you will find that if you are doing stuff and not getting the intended results then it is highly likely that you are using a map that does not have an adequate correspondence with the world. Let’s take a look at how this applies to the world of customer-centricity, customer experience and CRM.

Many established businesses have an inadequate map of ‘customer-centricity’

Imagine the following scenario.  My 11 man soccer team is on the pitch and it is divided into four groups: goalkeeper, defence, midfield, attack.  I come to the realisation that my team is not delivering the intended results or that there is a risk that it is not likely to do so.  So I have instructed the groups and the team to change and I may even have hired experts to help me bring this about.  You come along and see the goal keeper is busy moving the goalposts to make them goal smaller.  You see that the defence is busy being replaced with fewer and cheaper players who are on someone else’s payroll (‘outsourcing’).    You see that the midfielders are busy learning a new method of passing the ball.  You see that the attackers have been told to follow a new method and use new technology: high-tech boots that promise to help them run faster. And so forth.

Then you laugh out loud.  Why?  Because you see the absurdity of the situation.  At one level, what I am doing / what my team is doing / what my hired experts are advising makes perfect sense.  Yet, at another, more important level it is just absurd.  Why?  Because you get that the game has changed.  You get that we (me, my team) should be on the rugby pitch playing rugby – a completely different game!  You see something that I do not see.  You see that I think I am playing rugby and I am not!

That is exactly what is happening in the business world when it comes to customer-centricity and customer experience – the same old companies continue to be an exception.  Allow me to make this real by using just one example.

Lets take a look at ‘customer lifetime value’

Lets, consider customer lifetime value.  Companies that have jumped on the customer focused bandwagon have spent considerable sums in developing ‘accurate’ customer lifetime value models.  Those that have not are busy doing so or refusing to do so because it is not possible to come up with a lifetime value model.  Take a good hard look: you will see that this is a transactional model at work.  I will only invest in you, to treat you well, if I can figure out in advance that I will get more out of this then I have to put in.  Dive deeper and you will find that the hidden assumption is that each customer has a fixed customer lifetime value that is attached to her – like her name is attached to her.

Now go and read ‘Reinventing The Wheel’ by Chris Zane and you will find that he continues to run his business on the principle that each and every customer has a lifetime value of $12,500. And it is everyone’s job to deliver a unique experience and realise that lifetime value.  You see Chris Zane gets the philosophy (the game) of customer-centricity!  Chris (and his team) is creating value for his customers by treating each and everyone has a $12,500 customer.  He did not hire a customer insight team to do all the calculations.  He sat down and estimated it based on what a customer would purchase if Chris managed to keep that customer for a lifetime.   When you dig deeper you find that Chris chooses to trust and invest in his customers.   And customers are paying him back.  How many of these customers have become $12,500 customers because of the way that Chris and Zane’s Cycles treats them that way?  Chris gets that the mission of creating that $12,500 in cusotmer lifetime value falls to  Zane’s Cycles: yes it has to be created not just calculated!  It is created by selling and delivering unique experiences (again and again) that customers value:  trust, support and outstanding service is a core part of these unique experiences.

Conclusion and Recommendation

To sum up, established business have completely misunderstood the principle behind customer lifetime value because their mindset is old school: transactional – focussed on extracting value.  Chris Zane gets the deeper game from which arises the principle of customer lifetime value and that is why he has made it work.

If you really want to grips with the customer-centricity game then read Chris Zane’s book:  ‘Reinventing the Wheel’.  It is gem of a book and I wholeheartedly recommend it.

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