On Customer Obsession

Customer Obsession Is Fashionable

I hear more and more Middles & Tops mention the importance/need for customer obsession. It’s often used as an exhortation to the Bottoms – those on the front line.  Something interesting happens when I ask the speaker what s/he means by, is pointing at, when s/he speaks of customer obsession. Silence followed by stuff that shows up for me as either banal or made up on the spot.  Little in the way of thinking (as in contemplation) has occurred in many instances.

Is Customer Obsession New?

Interestingly, customer obsession isn’t new. What’s the basis of my assertion?  I remember 2000/2001: my colleagues and I start a customer strategy engagement (centred on 1to1 marketing) at a well known mobile telco. What do we find? We find a dedicated research unit in the marketing function.  A unit which has budget of many millions. What is this money spent on?  Understanding the market (totality of customers for mobile phones/services); understanding their own customer base; and understanding the customers of their competitors.  I categorically state that the head of this research unit and the folks that worked in that unit were obsessed with customers.

The interesting question is this one: Towards which end/s was this customer obsession directed?  Was it directed towards driving product development?  Or the customer’s experience of signing up for the right phone/package?  Perhaps, helping the customer’s make good of that which s/he had purchased?  No, not at all. The purpose was to work out how to drive up sales and profit margins through marketing: targeting the right messages/offers to the right customers or potential customers.

Was 2000/2001 the start of customer obsession? No.  I remember the power and practices of the various brand marketers whilst in the employ of International Distillers & Vintners back in 1993.  I say customer obsession of this kind -figuring out how to squeeze more out of the customer has a long history.

Let’s consider alternative conceptions of customer obsession.

Satya Nadella on Customer Obsession

In his book Hit Refresh Microsoft’s CEO says (bolding/coloring is my doing):

“First, we need to obsess about our customers. At the core of our business must be the curiosity and desire to meet a customer’s unarticulated and unmet needs ….. There is no way to do that unless we absorb with deeper insight and empathy what they need.….. When we talk to customers, we need to listen. It’s not an idle exercise….. We learn about our customers and their businesses with a beginner’s mind and then bring them solutions that meet their needs. We need to be insatiable in our desire to learn from the outside and bring that learning into Microsoft, whilst still innovating to surprise and delight our users.” 

Jeff Bezos on Customer Obsession

Here’s what Amazon’s founder & CEO says in his 2016 Letter to Shareholders (bolding/coloring is my doing):

“There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

Why? There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.”

Shortcuts on The Route of Customer Obsession

It occurs to me that many executives are all for customer obsession as long as they can just speak it sitting comfortably in the stands.  It’s another matter altogether when customer obsession requires leaving the stands and entering the arena.  Which arena? The arena in which customers show up and operate.  And the arena in which the customers interact with the organisation’s front line – websites, mobile apps, sales folks, customer services….

Take a look at the CX movement and ask yourself what is it characterized by?  Is it not journey mapping almost always in the comfort of a workshop in the corporate offices, and the results of voice of the customer surveys?  What are these?  They are proxies for the real thing.  These proxies are attractive as they allow folks to pretend they have insights from the arena whilst sitting comfortably in the stands.

Here’s what Jeff Bezos says with regards to proxies in his 2016 letter (bolding/coloring is my doing):

Resist Proxies

As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous…

A common example is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing… The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right…..

Another example: market research and customer surveys can become proxies for customers – something that’s especially dangerous when you’re inventing and designing products.

Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.
I’m not against beta testing or surveys. But you, the product or service owner, must understand the customer, have a vision, and love the offering. Then, beta testing and research can help you find your blind spots. A remarkable customer experience starts with heart, intuition, curiosity, play, guts, taste. You won’t find any of it in a survey.”

Enough for today.  I thank for your listening. Until the next time….

Maz Signature

 

 

 

Why I Prefer Not To Do Business With Customer-Centric Businesses

Why is it that I prefer not to business with a customer-centric business? Allow me to share my answer by referring to the UK grocery market.  Which supermarket chain was applauded, by many, for its customer-centred way of doing business? Tesco.  What was held responsible for fuelling this customer-centred way of doing business? The Tesco Club Card. Through this loyalty card, Tesco captured and made effective use of customer shopping data to grow revenues and optimise profits.  In the process Tesco came from nowhere to became the world’s second largest retailer.

Where is Tesco today? Here is what The Economist said back in July 2014:

… on July 21st Tesco abruptly announced that Mr Clarke would be leaving his job, apparently prompted by a warning that profits in the first half of 2014 would come in “below expectations”. In June Tesco revealed a drop in same-store sales that Mr Clarke admitted was the retailer’s worst performance in 40 years….

Recession taught middle-class shoppers that discounters like Aldi and Lidl were cheap but not nasty; they spent some of the money they saved at higher-end grocers, such as Waitrose and Marks & Spencer……

Tesco is faring badly. Its sales dropped by nearly 2% in the year to June while those of its closest rivals, Asda (which is owned by Walmart) and Sainsbury’s, rose by 3% or better. Despite his exertions, Mr Clarke failed to persuade consumers that Tesco offers better value than the discounters or quality to match the upmarket merchants.

Is this as bad as it gets? No. Here is what the Guardian newspaper stated in on the 22nd of September this year:

Tesco has suspended the head of its UK business and called in independent accountants and lawyers to investigate after discovering that its guidance to the City overstated expected first-half profits by about £250m….

Tesco shares fell almost 8% on Monday morning to an 11-year low of 212p, making them the biggest faller in the FTSE 100 index and wiping £1.5bn off the retailer’s market value. More than £6bn has been wiped off share value since 21 July, when the previous chief executive, Phil Clark, was ousted.

Why is it that Tesco is in such deep trouble? I say that Tesco has arrived at where it is at due to its customer-centric way of doing business.  What do I mean by this?  I mean that the Tops got fixated into harnessing the data yielded by the Club Card to get customers to part with more of their money in Tesco stores.

Was this done by offering customers superior products as in higher quality products? No.  The products were middle of the road yet ways were found of selling these at higher prices through clever marketing and merchandising.

Was this done by providing superior customer service in the stores? No. Tesco cut back on the number of people working in the stores so it was not unusual for the customer to find that there was nobody around to help when help was needed or find long queues at the checkout tills.

Was this done through a superior shopping experience? No. Management chose not to invest in the stores or the shopping experience in the stores. As a result the stores become less and less attractive over time.

I prefer not to do business with a customer-centric business because the management of such a business is more likely to be focussed on extracting value from their customer base through a variety of clever manoeuvres than earning its keep through superior products (Apple, Waitrose), superior service (John Lewis, Zappos), low prices (Lidl, Aldi), or a combination of service and low price (Amazon).

If you are a customer and your supplier is touting customer-obsession then  you might want to think about whether that is a good thing. Is the obsession with providing you with a superior product, superior value,  and/or experience? Or is it an obsession with with finding clever ways of getting you to buy more, pay more for what you buy, and get less in return? You might want to keep in mind that which many remind me of: business is not altruistic.

IBM’s CEO 2012 study: is technology really the number1 priority of CEOs?

In the second half of 2012, IBM issued its fifth biennial Global CEO Study titled Leading Through Connection.  IBM says this study is based on face-to-face conversations with more than 1,700 CEOs in 64 countries.  I have been reading it and want to share with you what I make of it.

Social – concerned, fearful, skeptical, uncertain?

It appears that CEOs are increasingly accustomed to volatility and expect unpredictability.   The same cannot be said for social. 

My reading of the study suggests that CEOs are concerned and fearful about social, in particular, its role in enabling customers to exercise power over organisations.  Second, most of them are skeptical of the value of social media – I suspect in driving revenues and profits. Even those who do see value in getting into social, are uncertain as to how to go about it.  Given that so few of them have dived into social media this does not surprise me.  How does one get comfortable with riding a bike?  By riding a bike – you get on the bike, you ride, you fall off, you pick yourself up, you get back on the bike and soon you are riding the bike.  Is social any different?

Are CEO’s customer obsessed and what is their take on customer analytics?

According to the study, CEO’s told IBM that three leadership traits, in particular, are the most critical for navigating through this disruptive era:  ‘customer obsession’, ‘inspirational leadership’ and ‘leadership teaming across the C-suite’.  I’ll come back to the latter two, let’s take a look at ‘customer obsession’.

When the world is unpredictable and the power continues to shift to customers it makes sense that ‘customer obsession’ is seen as the critical leadership trait.  Yet I wonder what this means?   Does this mean that CEOs will get out of their offices and get deeply involved with customers?  Spending time with them face to face like Lou Gerstner did when he took charge of IBM.  Or undertaking the kind of experience showcased in Undercover Boss.

According to the study, CEOs are investing in analytical capabilities that promise to yield customer insights.  More than 70% of CEOs say that they are looking to get a better grasp of customer needs and generate improved organisational responsiveness to customer insights. So, I suspect that ‘customer obsession’ entails spending money on technology in the hope that this will yield insights into customers that enable the enterprise to stay one step ahead of customers.  This is great news for the organisations selling analytics technologies (SAS, IBM….).  Whilst I see the value of analytics I remain doubtful of the impact this will make until and unless the CEO gets out and actually walks in the shoes of the customer and experiences the experience of the front line workers.

What does IBM advise?  IBM recommends that CEOs orient their organisations to get insight into and engage customers as individuals rather than aggregates (segments, markets).  The earlier IBM CMO study suggested that marketers are stuck on traditional research methods that look at and provide insight into these aggregates and not individual customers.  Where can organisations get insight at the level of the individual customer?  Through harvesting and mining ‘Big Data’ according to IBM.

What are the roadblocks on this ‘data based, insight driven nirvana’?

In its study IBM refers to come organisations as ‘outperformers’ (they are doing better financially than their peers) and ‘underperformers’ (doing financially worse than their peers).  What are the three key differences between these ‘outperfomers’ and ‘underperformers’ according to IBM?

  • ‘translate insights into action’ – 84% better than industry peers;
  • ‘excel at managing change’ – 73% better than peers;
  • moving into adjacent industries – 48% better.

So here we see the two major obstacles in the way of ‘data enabled, insight driven nirvana of business performance’.   Ability to act on insight.  And, in particular, act in such a way as to effect organisational change with efficacy: to make changes in the business (based on the insight) and to get the people in the organisation to go along with and internalise these changes.  And to do so quickly before the window of opportunity closes.  Clearly some organisations are better at this than others – those that excel at this are in the minority.  Interestingly, this issue of taking action/effecting change based on insight has been surfaced by VoC vendors like Mindshare.

Are CEO’s aware of the scale of the challenge?

It appears that CEO’s are aware of the scale of the challenge that is facing them.  How do I come to this conclusion? Leadership traits that are of importance to CEOs and what traits CEO’s are looking for in employees.  Let’s consider the leadership traits first and what they can tell us.

When it comes to critical leadership traits, ‘customer obsession’, ‘inspirational leadership’ and ‘leadership teaming across C-suite’ were almost equal in importance.  Statistically speaking, I suspect there is no significant difference between the three of them.   It kind of suggests, to me, that these are inter-related.  Let’s take a look at the latter two and what they can tell us.

‘Leadership teaming across C-suite’ suggests that CEO’s get that the default state of organisation – the silo structure and silo metrics – is that of optimisation of the parts and suboptimisation of the whole.  It also indicates that CEOs are aware that genuine collaboration and teamwork starts at the very top – if the C-suite does not work well together then it is highly unlikely that the lower ranks will work well together.  I also read into this an implicit acknowledgement that many C-suites do not work well as one team – personal interests and functional agendas compete against the well being of the whole.  This explains why ‘inspirational leadership’ is seen as a critical leadership trait: CEOs get that they have to inspire (to bring forth) the best of their people (starting with the C-suite) including working as one team for the collective benefit.  Is it possible I am concocting a story that appeals to me and is not in the study?  I leave you to decide for yourself.

IBM claims that CEOs are creating more open and collaborative cultures.  That does not strike me as being an accurate description of what is so based on my travels.  And I get that I have only experienced a small number or organisations.  What is more interesting is the claim that collaboration is the primary trait that CEOs are looking for in employees: 75% of CEOs label this trait as critical.  Why?  According to IBM, CEO’s see technology as an enabler of collaboration and relationships and are focussed on changes in how people engage with the organisation and with one another in order to fuel responsiveness, creativity and innovation.

And finally

It is interesting to note that CEO’s put ‘human capital’ as the most important source of economic value closely followed by ‘customer relationships’, with ‘product/services innovation’ being in third place.  If ‘human capital’ is that important then the value placed on collaboration and open-cultures is understandable.  If ‘customer relationships’ and ‘product/services innovation’ are this important then the investments in analytics and collaboration technologies make sense.  What does not make sense, to me, is the attitude around social: customer can be a great source of innovation.

Only 33% of CEOs consider business model innovation as key source of economic value.  This puzzles me given that one of the key issues that organisations have to grapple with is that of coming up with fresh business models that make the most of the opportunities and deal effectively with the disruptions caused by ‘social’ technologies and customer behaviour.   Perhaps many CEOs have not fully awakened to the scale of the challenge/disruption/opportunity facing them.  What do you think?

I doubt that technology is the no1 priority of CEOs.  Why?  Because ‘technology’ got 71% of the votes, closely followed by ‘people skills’ at 69% and ‘market factor’ at 68%.  It occurs to me that there is nothing in it – that all three of these factors are as important as each other.

Better World Books: the power of engagement through cause and not gimmicks

Forrester says we live in ‘the Age of the Customer’

Yesterday I came across this post by Josh Bernoff (Forrester) where he states that we are living in “the Age of the Customer” and asserts “that companies must be more than customer focused, they must be customer obsessed”.  He then goes on to set out the changes that companies need to make to become customer obsessed.   In the video Josh says “The only source of competitive advantage is knowledge of and engagement with customers.”

I say that ‘Cause Obsession’ trumps ‘Customer Obsession’

I beg to differ.  There is something more compelling than customer obsession.  What is that?  A obsession with a cause that touches the human heart and inspires customers, employees, volunteers, suppliers and the community to come together and live/further that cause.  It is one thing to engage customers it is something else when you can engage all the stakeholders. It is one thing to engage through gimmicks and something else to engage through an uplifting cause.

BetterWorldBooks is an excellent example of company that is engaging a range of stakeholders through cause. BetterWorldBooks landed on my radar back in December and prompted me to write ‘Better World Books: a great example of customer centricity being practiced’.  And then again last month prompting me to write ‘Better World Books: a great example of hi-touch relationship marketing’. So I decided to dig a little deeper to figure out what makes this organisation special.

A few facts on BetterWorldBooks

The company was founded by three friends and graduates of The University of Notre Dame in 2002.  They started by selling unwanted (and used) university textbooks online.  The cause and the social mission was built into the company right from the start – the very first book collection drive and sale at Notre Dame.  You can read more about the founding of the company here.

BetterWorldBooks has operations in the  USA and the UK, employs some 380 people, has some 1200 volunteers doing book drives (to collect unwanted books) and has some 3.5m books sitting in a huge warehouse at any one time.

Today, BetterWorldBooks is a global bookstore which turns up at number 261 in the Top 500 list of internet retailers.  It sells both new and used books.

Here is what the revenue picture looks like: $20m (2008); $31m (2009); $45m (2010); and $55-56m is expected for 2011.

BetterWorldBooks has raised over $9.7m for literacy and libraries and saved almost  56m books from lying around not being used and/or ending up in the trash cans.

They have shipped over 1.4m books (valued at $10.9m) in 58 sea containers to Africa. If you want to read more you can find their blog here.

What does BetterWorldBooks success rest on?

I am clear that the success of BetterWorldBooks is its cause.  The cause enables it to build a network of strong relationships with all of the stakeholders.  The students and libraries (suppliers) that donate used books.  The volunteers who do the book drives – collect the books.  The partner organisations (Books for Africa, Invisible Children, Room to Read…) which do the work on the ground of improving literacy.  Customers, like me, who buy the used and new books.

Why would anyone donate their time to collect books or donate their books for a profit organisation?  Because they believe in the cause – what BetterWorldBooks stands for.

Why would a customer like me make a return visit to BetterWorldBooks?  Simply because a core part of their Mission and Values is to flabbergast customers with great service.

Does BetterWorldBooks have an advantage over Amazon?

How does BetterWorldBooks turn customer like me into advocates?  Through a combination of outstanding customer service and cause.  In my world BetterWorldBooks has an advantage over Amazon.  I am an advocate forAmazon yet Amazon does not stand for any cause that touches, engages and inspires me.   In a world where all the other things are  increasingly becoming equal, cause is the difference that makes a difference.

What do you think?