Social Customer / Social CRM / Social Business: snake oil or great medicine? (Part I)

Recently I have been thinking about and diving into ‘social’ and that includes reading David Weissman’s book ‘A Social Ontology’.  It is not bed time reading – I will share my thoughts with you in due course. One thing I can share with you right now is that our current set-up is based on an atomistic ontology: people as particles rather than people as waves – think about how electrons show up in experiments.  I’ll come back to this at the end of this series of posts.

This week the organisers of a social customer engagement conference – The Social Customer 2012 – London, 29 March http://bit.ly/wCN9MA – approached me with an offer.  An offer of 3 tickets (1 for me and 2 for you) in exchange for me promoting it through this blog.  I value education so I took up their offer.  To keep myself honest, I am making all of these tickets available to you (the readers of this blog and the Twitter followers of this blog) – if I go to this conference then I will pay.

Given what has been showing up in my living, I did some bed time reading: trawling through the internet to get to grips with ‘social customer’, ‘social CRM’, and ‘social business’. Why?  To figure out whether all the ‘social’ speak is snake oil or great medicine.  Let’s start.

The Social Customer

I get the term ‘customer’: an entity that buys a product/service and makes a payment in return.

I get the term ‘social’: usually a person that spends time with people, enjoys/thrives on the company of people, actively contributes to people by taking an interest in their lives is called ‘social’; there are spaces that we designate ‘social’ where ‘socialising’ occurs, for example the cafe in Paris; and ‘social’ only means something when you have something to compare and contrast it against, specifically the designations ‘non social’ and ‘anti-social’.

‘Social Customer’ is just a meaningless phrase to me.  Which makes me ask the following questions: what kind of a creature is the ‘social customer’?  What are its defining features?  And importantly is this creature mythical like the unicorn or real like a dog?   Through my research I came across this article, the author sets out the following as “defining characteristics of social customers“:

  • hyper-connected – by this he means they carry a smart phone everywhere and have access to the internet;
  • readily reach out to peers and influencers (through social technologies / media);
  • are constantly researching (on the web of course)
  • share what they think of you (the business);
  • expect brands to engage them; and
  • control the purchasing cycle.

Read through the defining characteristics and then ask yourself how many customers fit that description?   A very small percentage – a tiny percentage.  Is that why Tops give ‘social’ a wide berth? If you were the CEO how much attention would you pay to the ‘social customer’ if it strikes you that only a tiny percentage of your customer qualifies as ‘social customer’?  Or is it simply that ‘social’ was lost from the Tops vocabulary a long time ago, soon after they entered school?  My take on this: I can forget about the ‘social customer’: by this definition / requirement, the ‘social customer’ is like the mythical unicorn – captivating yet unreal.

The Social Customer Manifesto

Then I came across the Social Customer Manifesto – it is on the right hand side of the website page, you might have to scroll below the fold.  I took a good look at this and then I dug into my lived experience of my fellow human beings as human beings and in their ‘customer’ role.  Here is my zen like take on it:

I’ll leave you to decide whether my view fits in with your lived experience or whether the view set out in the Social Customer Manifesto is a better fit. From where I sit, the writer of the Social Customer Manifesto, has an understanding of human beings (in their role of customers) which is radically different to my lived experience.  Please do not point out Wikipedia, Apache, Linux etc to me – those were born out of a completely different context: a context of contribution to a noble cause – almost the opposite of commercial reality which is to enrich the Tops and their masters the financial analysts that work the stock markets.

Want to win one of the 3 free tickets?

If you want to win one of the 3 free tickets then please read the following carefully:

What you need to enter the competition for the free tickets?  You need to send a tweet that conforms to the following specification:

“I’d like 2 attend The Social Customer 2012, London, 29 March http://bit.ly/wCN9MA #MzIq | {give a reason here}”

Who will choose the winners? Me.

How will I choose?  The three tweets that make the most contribution to me: put a smile on my face; make me laugh; put something into the world by giving your time or some other resources to a worthy cause.

And finally, I thank you for the privilege of your listening and the contribution that your comments, your emails make to my living.  YOU inspire me to continue speaking and sharing my authentic voice through what you share with me and how you share.  I am grateful that you exist.

The customer loyalty riddle (part I)

Customer loyalty: a riddle without a solution?

As far as I can tell guru’s have been promising nirvana – revenue growth, profit growth, higher profit margins, sustainable competitive advantage – through customer loyalty.  I remember that this was the holy grail when I started working with Siebel and later moved to The Peppers & Rogers Group back in 1999/2000.

That was 10+ years ago and it would appear that little progress has been made by the majority of companies in doing better at cultivating genuine customer loyalty and improving customer retention. Yet over that time all kind of ‘solutions’ have been attempted and billions have been spent on these ‘solutions’.

Which company has cultivated that much desired loyalty through CRM?  For a little while Tesco appeared to be the poster child for analytically driven CRM through its ClubCard loyalty scheme.  Now it looks like we may have been too hasty: Tesco market share is now the lowest it has been since 2005 and the company, in January, issued its first profit warning in decades. Put differently, if the success of Tesco was attributed to the analytically driven CRM then consistency suggests we should also attribute Tesco’s current failure (profit warning, market share drop..) to analytically driven CRM.

It would appear that customer loyalty is a riddle, if that is so then what is the key to this riddle?  Before I share my point of view with you, allow me to tell you a story that is also a puzzle.  Dive into it, you will enjoy it and you will get value out of it even – paradox makes you think, go beyond the obvious, and opens you mind.

How to divide the camels?

Do you know anything about Sufism? No, that is OK, you only need to know that a Sufi is a special sort of human being – a being that has penetrated into existence and tends to talk ‘indirectly and paradoxically’ so as to by pass the mind which is thrives on logic – think of him as a zen master.  Here is the story:

There was once a Sufi who wanted to make sure that is disciples would, after his death, find the right teacher of the Way for them.

He therefore, after the obligatory bequests laid down by law, left his disciples 17 camels with this order:

‘You will divide the camels among the three of you in the following proportions: the oldest shall have half, the middle in age one third, and the youngest shall have one ninth.’

As soon as he was dead and the will was read, the disciples were at first amazed at such an inefficient disposition of their Master’s assets.  Some said, ‘Let us own the camels communally’, other sought advice and then said, ‘We have been told to make the nearest possible division’, others were told by a judge to sell the camels and divide the money; and yet others held that the will was null and void because its provisions could not be executed. 

Then they fell to thinking that there might be some hidden wisdom in the Master’s bequest, so they made inquiries as to who could solve insoluble problems. 

Everyone they tried failed….”

What is your answer, your solution to this riddle?  Have a go at solving this riddle – you will get value out of it if you allow yourself to get value out of it.

Let’s continue with the story – dividing camels – and get to the solution

“Everyone they tried failed until they arrived at the door of man called Ali.  He said:

‘This is your solution.  I will add one camel (of mine) to the number thus making 18 camels.  Out of the 18 camels you will give half – 9 camels – to the oldest disciple.  The second of you will get one third of the total, which is 6 camels.  The youngest of you will get one ninth, which is 2 camels.  That makes 17 camels which your master left you to divide amongst yourselves.  One camel – my camel – will be left over and you will return that camel to me.’

This is how the disciples found the teacher for them.”

My thoughts on this story, this riddle

– The conventional approaches to solving the riddle did not work, none of them solved the riddle, because the riddle was designed to go beyond the conventional;

– Because the conventional approaches did not work then the ‘conventional gurus’ stated that riddle was absurd and should be ignored or that conventional approaches be used e.g. sell the camels and divide the money in the allotted portions that is always the case, the conventional cannot look beyond convention as they neither have the heart nor the mind for the looking beyond;

– Notice the characteristic of the solution, it has a unique quality:  It has to be put into the game, it is used in the game and at the end of the day it can be taken out of the game whole and complete – it does not lose anything of itself by giving itself.

Final question or two for you

What does this story provoke in you when it comes to customer loyalty?  What avenues does it open up for you that were not present before?  What do you think is the solution to the customer loyalty riddle?  Do you even think there is a solution?

I will share one perspective with you in my next post.  I wish you well and my thanks (to you) for listening to my speaking.


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

Hallmark of a bad strategy: failing to face the problem

This post follows on from the previous two posts.  In the first post (of this series) I listed the 4 hallmarks of a bad strategy.  In the second post I expanded out one of these hallmarks – fluff.  This third post deals with the second hall mark of bad strategy: failure to face the core problem/s – what I call the ‘elephant in the room’.

What does Richard Rumelt say about strategy?

In his book Good Strategy Bad Strategy, Richard Rumelt (“RR”) writes:

“A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge.  If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy.  And if you cannot assess a strategy’s quality, you cannot reject a bad strategy or improve a good one.”

International Harvester: a great example of bad strategy

According to RR, International Harvester was once the 4th largest corporation in the USA.  In 1977 the board brought in a new CEO (Archie McCardell) to turn around the sleepy company.  With the help of his team of financial and strategic planners (including consulting companies), by 1979,  Archie had put together a “Corporate Strategic Plan”.

This plan was simply a lumping together of 5 separate strategic plans – one for each of the operating divisions (agricultural equipment, truck making, industrial equipment, gas turbines, components).   The “strategy” was to increase market share in each market and cut costs in each of the divisions thus grow revenues and profits.

The Corporate Strategic Plan was full of detail.  RR says “Looking within the agricultural equipment group, for example, there was information and discussion about each segment.  The overall intent was to strengthen the dealer/distributor network, and to reduce manufacturing costs…”  Despite this detail, this thinking, the plan was classic bad strategy.   Why?

RR writes, “The problem with all this was that it ignored the elephant in the elevator.”  What was that elephant? The elephant was Harvester’s “grossly inefficient work organisation”.   And this was not a problem that was going to be fixed by pushing managers to grow market share nor by buying equipment.  Why?  Because the inefficiency lay in the ‘work rules’ – how work was organised and done.  Furthermore, Harvester had the worst labour relations in American history.

What do you have if you fail to identify and address the key business problem/s?

According to RR, “If you fail to identify and analyse the obstacles, you don’t have a strategy.  Instead, you have either a stretch goal, a budget, or a list of thing you wish would happen.”

So how did thing turn out at Harvester?  Profits improved for a year or two simply through cutting admin overhead.  Then the company went through a six month strike.  After the strike ended Harvester began to collapse.  According to RR, “During the whole 1979 – 85 period, it lost more than $3 billion, closed 35 of its 42 plants, and shed 85,000 workers…….The company sold off its various businesses…..It is, today, a leading maker of heavy trucks and engines.”

What does this have to do with customer-centricity, customer experience, customer loyalty?

Everything.   Let’s just talk a look at one big challenge.

Imagine that you are major bank, or mobile operator or gas/electricity supplier what is one of your biggest challenges in making the transition to being customer-centric?  What if I said, the biggest challenge is there is really nothing to differentiate the players (from one another) in these industries and so they rely on “Bad Profits” to hit their revenue and profit numbers.

Frederick Reichheld (“the loyalty guru”) coined the terms “Good Profits” and “Bad Profits”.  If you take a look at any business you can break down the profits into “Good Profits” and “Bad Profit”.  When you create genuine value for a customer (through the eyes of the customer) then your reward is in the form of Good Profits and you do not have to devise loyalty programs and worry about customer retention and loyalty.  An outstanding example is Apple.  Other examples include SouthWest Airlines, Starbucks, USAA, Zane’s Cycles and Zappos.  In the UK, John Lewis, Waitrose and Richer Sounds spring to my mind.

When you make profits at the expense of your customers these profits are called Bad Profits.  How do you make Bad Profits? Generally, you have access to information, expertise and resources that the customer does not have and you use those to ‘manipulate’ the customer to benefit you at his/her expense.   Specific practices associated with “Bad Profits” include but are not limited to: deliberately difficult for customers to pick the right product; websites adding in extra items that the customer has not selected and forcing the customer to delete these from the shopping basket; disguising the true cost (to the customer) through underhand charges that are not visible to the customer; making it hard for the customer to know and manage his plan so that she is hit with unexpected charges; selling worthless products eg. PPI;  making it hard for the customer to cancel – make them go through lots of hoops etc.

The point to get is that banks, telecoms operators and utilities have collectively spent a fortune on CRM systems and other Customer initiatives over the last ten years and they really have little to show for it.  How has the customer service needle moved?  What about customer loyalty – genuine customer loyalty?     I’d assert that, looking at the situation through the customer’s eyes, very little has changed which makes customers love the players in these industries more than they used to.  Why?  Because the core business challenge of overhauling the business model (and associated practices) has not been addressed.  Does that sound like the Harvester example?  Buy in new equipment (CRM systems), extend the distribution network (website, mobile, social media..), reduce costs (call-centre outsourcing / offshoring, replace humans with self-service, hide contact numbers…).  Please note that I am only using banks, telcos and utilities as examples – they are not the only ones that engage in practices that deliver Bad Profits and get in the way of authentic customer-centricity.

Another big challenge: the whole field of CRM, customer service, customer experience, customer-centricity, data driven marketing is blind to the difference that makes a difference.  As such this key challenge is not even recognised and it is then the psychological mechanisms of denial, suppression and repression make sure that there is no permission to point out this elephant in the room.  What is this elephant that I am talking about?  I invite you to have a go at figuring it out.  For my part, I will share this with you in a follow up post.   I thank you for listening to my speaking.

How to generate that elusive emotional connection between your brand and your customers: Sainsbury’s shows the way

Warning

This post is NOT for novices.  If you are novice then I suggest you not read any further as you will not get it and it will occur to you as ‘nonsense’ and a ‘waste of time’.  The exception is if you are a novice with an open mind – you see that makes you not a novice, but a master!  I know that it sounds ‘nonsense’ and ‘paradoxical’ – you are warned.

Failure is built into the existing dominant mindset

My blessing and my curse is that I am a constant outsider.  That is simply what goes with being born into one culture (and all that goes with it) and then growing up in a completely different one.  What has this got to do with business, with customers, customer relationships, CRM and customer loyalty?  Kind of everything.

I have been involved in the whole Customer dance since 1998 and the one consistent is an intuitive sense that the whole enterprise is founded on a context that ensures that the people and the companies that are doing all of this Customer stuff (to build customer loyalty and reap the benefits) will fail to cultivate that much desired customer loyalty.  How best to convey that?  Let me start with two quotes that kind of point towards what I am striving to make visible to you:

“We will win and you will lose. You cannot do anything about it, because your failure is an internal disease. Your companies are based on Tailor’s principles. Worse, your heads are Taylorized, too. You firmly believe that sound management means executives on one side and workers on the other, on one side men who think, and on the other side men who can only work.  For you, management is the art of smoothly transferring the executives’ ideas to the workers’ hands”  Konosuke Matsushita in 1989 (Founder of Panasonic)

“Before producing the products, we produce men” Toyota’s motto

If you still don’t get it then let me share with you what Gary Hamel (management guru) has to say.  In his latest book (What Matters Now) Gary points out that the single biggest reason most companies don’t adapt and innovate is that their leaders fail to write off their own depreciating personal intellectual capital.  What he is say takes us back to the first quote by Konosuke Matsushita and should also shed light on the second quote (above).

This is what it takes to cultivate loyalty – do you have what it takes?

It is quite possible that you think you get what I am pointing at.  That is the disease in which the whole Customer movement is mired and has been mired in since inception.  You get it intellectually – at best you understand it and this is what one of the wisest thinkers / philosophers on the human condition has to say on that:

“In life, understanding is the booby prize.”  Werner Erhard

You see the whole issue is that understanding through the mind is simply not enough!  So let’s move on to a zen story that gets to the heart of the matter that I am concerned with today.  I invite you to notice how you are impacted (or not) by it:

“A saintly woman was walking along the edge of the cliff.  Several hundred feet below her, she saw a dead mother lion, surrounded by crying cubs.  Without hesitation, she leaped off the cliff so that they would have something to eat.” 

Do you get it?  COMPASSION/LOVE is the context which gives rise to the kind of being and doing that co-creates the emotional bond between you and your fellow human beings.   Your customers are human beings – not wallets, even though you think and talk in terms of wallets and wallet share.

If you are novice, an intellectual, a ‘rational’ and quite possibly a Top then it is likely that I have pressed your buttons and that little voice inside your head is coming up with ‘nonsense’, ‘rubbish’, ‘liberal’, ‘no place for this stuff in business’…….  So let me share an interesting story with you about one of the UK’s biggest retailers.

The Sainsbury’s tiger bread story: why did this story touch our hearts and put the Sainsbury brand in the limelight?

3 year old Lily wrote to Sainsbury:

And here is the Sainsbury response:

Which brings me back to the central question:  why has Sainsbury’s reply to Lily and the positive response to the Facebook campaign (to change the name of tiger bread to giraffe bread) made such an impact on us?  Reading this article I am struck by the following comments made by various people:

“Steven Dodds, co-founder of {united}, called the tale “genius”, adding “it screams of spontaneous generosity and humanity.”

Dodds said: “Consumers want to be able to put their trust in brands and this random act of kindness, which has made a strong impression on people, embodies the importance of that brands connect with customers. With people wanting to build relationships with less obviously managed brands, Sainsbury’s hits the mark in showing its human side.”

Mark Dye, MD of White Label Media, commented: “The humour and warmth shown by a big brand like Sainsbury’s conveys it as a warm down to earth, friendly and approachable brand staffed by real people rather than the complex and often frustrating IVR systems most consumers are faced with nowadays.”

Max Thompson from Plug and Play explained that Sainsbury’s decision to rename the bread has reinforced that it cares about its customers and that it considers their opinions enough to cause a rebrand of a product.   “The impact it has had on the Sainsbury’s brand is that it has reinforced that it cares about it’s customers and that it considers their opinions enough to cause a rebrand of a product. An activity which would normally be exclusively an executive decision,””

Summing it up

The access to that emotional bond that touches our humanity and lifts the human spirit is LOVE borne out of COMPASSION.  There simply is no agreement for these words, these concepts, and so it is no surprise that Steven Dodds of United (above) replaces them with “spontaneous generosity and humanity”.  Just ask yourself what provides access to “spontaneous generosity and humanity”.  I assert that it is:

  • an enlightened individual (and organisation) which takes us back to Toyota’s motto“Before producing the products, we produce men”;
  • an enlightened organisation is simply an organisation where the people in it and the culture in which these people live is one that is in touch with the best of humanity – compassion, kindness, love.

Finally: a warning and an invitation

The trap is for you to read this, agree with it and understand it intellectually – nodding your head.  Why?  Because purely intellectual understanding is a dead end.  All that is is because of action.  Action is that which gives rise to the way that things are and the way that things are not.  So I leave you with some of the wisest words uttered for our age – the intellectual age:

“In life, understanding is the booby prize.”  Werner Erhard

Open you heart – all action that has ever made a difference in the world has come from the heart.  Jonathon Haidt refers to the ‘Heart’ as the ‘Elephant’ and the ‘Mind’ as the ‘Rider’.  The ‘Rider’ often thinks he is in charge the reality (as neuroscience amply demonstrates) is very different – it is the ‘Elephant’ (the limbic brain, the Heart) that determine pretty much everything that does and does not happen.  So once again, open your heart if you want to cultivate the customer loyalty that you are looking for.  And if you are not prepared to do that then recognise that you are on a fools errand: how many more $ millions are you going to spend to stay exactly where you are? 

I thank you for your listening and invite you to enter into a conversation with me.  I suspect that I have pressed at least one of your buttons!  Surely you must have something to say – surely you want to tell me that I have got it all wrong.  I look forward to hearing what you have to say.

Why do only a handful of companies excel at cultivating customer loyalty?

The story state of Customer Experience

Dave Brocks latest post (selling disguised as relationship management) and Beyond Philosophy’s Global Customer Experience Management Survey (2011) which made the point that a lot of stuff that is not Customer Experience is being badged as Customer experience got me thinking about this sorry state: lots of talk, lots of people with the right titles, lots of spend on technology and yet the same old organisational behaviour.   Which begs the question: why it is that only a few companies truly excel at Customer Experience and customer-centricity?  Now I can list all the usual candidates: spaghetti like systems, silos, channel proliferation, organisational design, conflicting agendas & metrics and so forth.  That is exactly what I am not going to do because I believe that these are red herrings that are used to paper over what is so.  So let’s take a skeptical look at business and see if this sheds any light.

The smuggler, the border guard and the wheelbarrow

Every day a man turns up at the border with a wheelbarrow and some stuff in it.  Every day the border guard examines the stuff in the wheelbarrow convinced that the man is smuggling something.  Some days the stuff is clothes, other days footwear, sometime watches, sometime blankets yet none of the stuff in the wheelbarrow is contraband and so the border guard reluctantly allows the man across the border.  This goes on and on until the border guard retires.  Shortly after that the border guard and the man meet accidentally and the border guard asks him to say what he was smuggling.  The man replies “Wheelbarrows!”

Let’s stop for a moment and look at the whole customer stuff: customer satisfaction, customer focus, customer loyalty, customer relationship management, customer experience and customer-centricity. And ask the question: what is right in front of us that we are missing?  What is our ‘wheelbarrow’?

The name of the game is neither Customer Experience nor customer-centricity

Is it easy to do well in a truly competitive industry?  No, it is hard work.  What is the ideal scenario for every company in a competitive space?  To become the monopoly supplier.  Why is this appealing?  Because, you can dictate terms to the customers and they have to play ball.  When you are in that position you do not have to bother with all this nonsense about customer focus: customers are difficult, being customer focussed is hard work and besides it stops you from making monopolistic rents.  If you cannot have a pure monopoly then you can get something like it – and oligopoly.  This is where a small bunch of companies control the market: they sell similar products, at similar prices, in similar ways and have the same business models.  In effect, they ‘agree’ to carve up the market and the profits.  Often these industries have high barriers to entry and so there is no real competition: think banks, utilities, telecoms…….The last thing that any CEO, Board of Directors or shareholders want is a truly competitive market.  Why? Because you have to fight for customers and their wallet.  Which brings us to an important point.

What has changed is that the traditional means of attaining this outcome no longer work as well as they used to.   Originally there was control over valuable natural resources and distribution channels. Later, control of intellectual property and shaping the mind of the consumer through advertising, branding and PR. Since the rise of the internet the traditional means (resources, distribution, IP, advertising..) have not been working that well.  Just think of the disruptive power of the internet: you no longer need stores and all the capital that goes with that; your market is the whole world and you do not even have to setup a website – you can pitch your tent at ebay and sell to the whole world; and customers are awash with useful information that makes them better informed, smarter decision makers and more discriminating buyers.  This is why we have heard and read so much talk about targeted marketing, relationship marketing, permission marketing, personalisation, customer focus, customer service, customer experience, customer-centricity.

Does that mean that there has been a wholesale transformation of the heart (love of the customer) or of the head (change in worldview)?  I am think that there has been no such change.  The game is still the same: to orchestrate the levers of power to become monopolistic suppliers and thus extract monopolistic rents.   And if that is not possible then many businesses do the utmost to get the better of customers (too many option, complicated pricing, misleading advertising, dumbing down customer service etc) to maximise short term profits.  If it is the ‘age of the customer’ (IBM says it is) then we are talking about many businesses being dragged kicking and screaming into the ‘age of the customer’.  Many if not almost all would prefer the good old times when customers had no voice, no power and simply put up with what they were given.  Take a good look at the laggards (you know who they are) and you will notice that they still hold monopoly type positions, accrue monopolistic rents and continue to pay lip service to customer service and ‘the customer is king’.

If you see this then you can see the ‘wheelbarrow’ that is right in front of us and which we may have been missing: the vast majority of businesses want and strive to become monopolistic suppliers so that they can monopolistic rents without the hard work of being customer-centred.   If you accept this then you can understand that whilst the titles of changed from “Sales” to “Relationship Manager” the hidden objective is the same: sell more, increase “share of wallet”.   You can also understand why business process management, lean, cost-cutting via self-service technology, customer service, marketing etc  have all been rebadged as Customer Experience – changing labels is the easy part and Drayton Bird has an excellent/witty post on this.   Put differently, all the talk of customer focus, customer service, CRM, Social CRM, customer experience and customer-centricity is simply the bric-a-brac in the ‘wheelbarrow’ that prevents us from seeing the ‘wheelbarrow’ for what it is.   Any real form of customer-centricity (as opposed to the talk) is being brought on by new entrants to the battleground.  And by the power wielded by customers who now have the technologies and platforms to be better informed, make smarter decisions and make their voices heard

To excel at customer-centricity, Customer Experience and customer loyalty you have travel along the road less travelled

Which bring me back to my original question: why do only a handful of companies excel at cultivating customer loyalty?  Because by design or by accident the people who started these companies  operate from a customer centred paradigm and have built customer-centred business models, cultures and organisations.  And the leaders of these companies were willing to play the long term game.  How long did it take for Amazon to become profitable?  What about Zappos?   Is USAA simply a vehicle for churning out profits for shareholders or an organisation with a mission to service members of the armed forces?  Starbucks is a great example of a company that made it fortune by understanding customers human needs and delivering them (“the third place”)  and then got itself into trouble by forgetting this mission (and associated values, operating practices) and chasing growth and profitability targets set by the analysts.  Starbucks had to go back to the basics to connect with their customers and win them bac

Perhaps this handful of companies (Amazon, Starbucks, USAA, Zane Cycles, Zappos..) will provide the inspiration for authentic customer-centricity:  O2 (UK mobile telecoms operator who does not think of itself as that) is a company that has embraced customer-centricity with a fervour that is necessary to be an experience services brand and organisation.  In the process it has become the leader in the UK telecoms industry: brand, revenues, subscribers, profits. The recent Ofcom results show that “The least complained about mobile provider….was O2, with 0.02 complaints for every 1000 customers compared to 0.14 in the case of 3UK.”  This is remarkable when you consider that O2 was spun off from a former state monopoly BT in 2001.  And birth O2 was viewed as a second rate player in the telecoms market and some doubted its future prospects.  Maybe more executives will follow the lead of O2 and genuinely orient their companies around customer, customer experience and customer-centricity.

A final word

To excel at Customer Experience and customer-centricity you have to have an affinity for people as human beings.  I will go further and say that you have to connect with and care about your customers as human beings first and wallets second.  Going even further I’d say you have to love your customers and show them that you love them.  In my view this is and has always been the great (hidden) strength of Steve Jobs and Apple:  a deep affinity for the misfits, the rebels, the people out to create a more beautiful world.  If you can see merit in what I am saying then I recommend that you read the following insightful post by Pete Abilla: How to be human

What do you think?

What you are failing to do is much more important than what you are doing?

There are two kinds of errors that you can make: errors of commission and errors of omission.  An error of commission involves doing something that you should not have done.  A good example of this is the money that large companies invested in implementing complex CRM systems on the assumption that these would engender customer loyalty and drive revenues and profitability.  Closing down Napster and thus allowing the likes of BitTorrent to rise was an error of commission made by the music labels.  If you take a look at mergers & acquisitions you find that the research shows that these almost always destroy value and are not a good idea: the AOL and Time Warner merger is the one that sticks out for me.  If you look at this at a global level then the deregulation of the financial services industry was the big mistake that has brought the western economies to their knees.  Errors of commission are easy to spot in hindsight.

Errors of omission are the more important ones.  These errors occur when you fail to do something that you should have done.  Did Nokia indulge in an error of omission in sitting on smartphone technology (insiders tell me Nokia had this technology) and not introducing it and thus letting Apple steal the show?  Did the music industry make an error of omission in not setting up online music stores allowing customers to download individual songs? Did the offline book stores make an error of omission in not embracing the internet aggressively and thus allowing Amazon the premier seat at the table?

So where is this leading?  In the Customer field there is a whole bunch of stuff that companies should be doing right now and yet they are not doing it.  As such these companies are making errors of omission.  Allow me to give you some examples.

The words have changed yet the mindset is the same.  The mindset continues to be about finding clever ways of getting customers to do what we want and reducing costs.  The mindset has not shifted to a relentless focus on creating superior value for customers and figuring out how we get a fair reward for doing; time after time I hear something to the effect “How do we make more money out of our customer base or reduce the cost of servicing our customers?”  I rarely hear “How do we create more value for your customers?”.  Yes, it really does matter which comes first because what comes first determines the whole context for what happens.  It requires one kind of mind, one kind of organisation, to ‘extract’ value and grow this years financials.  It requires a fundamentally different mind and organisation to create value for customers, cultivate relationships and secure a lifetime income stream.

Effectiveness is doing the right things.  Efficiency is doing things right.  To cultivate long term relationships organisations have to focus on effectiveness: doing the right things as viewed from the customer perspective.  Yet the organisational focus continues to be on efficiency.  The relentless focus on efficiency means that I had to spend ten minutes or so hunting around for a telephone number to contact Sky.  It is also the reason that after four phone calls to BMI I was not able to pay my bill because my call was important to them yet they could not answer it even after five minutes.  It also means that human-human encounters are being replaced by human-technology interactions and so the opportunity to build emotional bonds is being sacrificed.  As a famous systems practitioner pointed out “The righter you do the wrong things the wronger you become!”

The organisational design is the same.  The functional organisational design and the associated management system was and is designed for a manufacturing centred organisation operating within a command and control operating system.  To be a customer centred organisation requires a fundamental change to the way that the organisation is designed.  It requires recognising that the front line people (those interacting with customers) are the most important actors in the organisation and the role of managers is to support these ‘actors’ in putting on the best performance they possibly can.  If you take segmentation seriously then it requires operational changes and not just sending some communications via email, others through SMS and the rest via direct mail.

I could go on and on and I am sure that if you put your thinking hats on then you can complete the list yourself.

Is your organisational focus on errors of commission?  Then who is looking out for errors of omission?  Please remember that the errors of commission rarely kill you.  Yet, errors of omission do exactly that even if it takes a little while for the results to show up.

A great example of using Relationship Marketing to deliver a memorable customer experience

On relationship marketing

About ten years ago relationship marketing was in vogue.  Marketing departments were abuzz with the talk and the promise of relationship marketing.  And I noticed Seth Godin’s Permission Marketing in many a marketing department.  Since then the word relationship has been jettisoned and today we are left with customer marketing, customer life-cycle marketing and CRM (marketing).  Why?

I believe that many who started on the path of relationship marketing have collapsed two distinct categories of marketing into one.  In one form of relationship marketing you use marketing to cultivate and grow relationships – the emotional bond between you and your customers. This form of relationship marketing I refer to as Relationship Marketing: it is the real deal – at least in my book.

There is a world of difference between Relationship Marketing and Customer Life-Cycle Marketing

In the second form of relationship marketing you use the ‘relationship’ – the customer life-cycle, the customer journey – to organise and execute your marketing to customers.  This second form of marketing is simply a different, perhaps a cleverer, way of doing direct marketing.  Whilst it may drive up response (because of getting the timing right) it does not necessarily increase the bond between you and your customers – that is to say that it does not strengthen the relationship and increase loyalty.  This form of marketing is best described as Customer Marketing or Customer Life-Cycle Marketing.

It is a shame that so many marketers have settled for Customer Life-Cycle Marketing rather than Relationship Marketing. I get lots of direct mail and I throw most of it away before opening it up.  I am on the Dell database (as I bought a computer from them many years ago) and they continue to send me a catalogue.  When I receive it, I throw it away.  I am a Sky (pay TV) customer and part of their customer marketing database.  So I receive the magazine, I read it and then I put it in the bin.  The magazine does not build any emotional loyalty between us.

Practiced correctly, Relationship Marketing packs an emotional punch, generates a memorable experience and drives up customer engagement and loyalty.  Allow me to share an example with you.

Direct Recruitment: a great example of Relationship Marketing

About two days before my birthday I received some post, one looked like it contained a birthday card so I opened it eagerly.  And this is what I saw:

On touching the card I realised it was a top quality card and I was immersed in trying to figure out which of my considerate friends had been the first one to send me such a fine card.

So I opened up the card and was greeted with a handwritten personal greeting from Sarah Owen who runs the Direct Recruitment agency.  I was surprised and delighted at the same time.  Sarah and I met back in 2007/2008 and each year she sends me a birthday card and each year it comes as surprise. No other company remembers and celebrates my birthday – arguably the most important day of the year for me.

Once I came to grips with my surprise and my delight I noticed the third piece of the card – see below.

This is a great piece of direct marketing:

  • It offers me an opportunity to help a friend;
  • It spells out the benefits for me of helping out a friend; and
  • It compliments me in the very first sentence “..someone as talented as you….”; and
  • The last sentence is a great finish “We really do value your recommendation, so thank you in advance for thinking of us.”

What Impact Did This Have On Me?

Frankly, I feel valued both as a human being and as a professional.  And in return I value Sarah and Direct Recruitment.  More than that I feel indebted to Sarah and I feel a desire to find opportunities to refer people to Direct Recruitment.  I have absolute confidence in their professionalism.  Indeed  I have phoned Sarah to thank her.

The Lesson and the Opportunity

There is a wide open space to deliver knock-out customer experiences for your customers through Relationship Marketing. That means using marketing to build relationships by creating emotionally engaging customer experiences that matter to your customers. How about using special occasions like birthdays, Christmas and anniversaries (first time the customer bought from you)?

So few companies who claim to be customer focused actually take advantage of these opportunities. I wrote a post on that back at Christmas time: “With so much customer focus why am I not drowning in thank you cards?”

Finally, please do remember that there is world of difference between Relationship Marketing (as I have described here) and what too often passes for relationship marketing: Customer Marketing, Customer Life-Cycle marketing and CRM