How the world has changed: TeleTech buys The Peppers & Rogers Group

I was a part of The Peppers & Rogers team here in the UK at the turn of the century.  That is where I met some of the people who I find to be the most passionate about advising and assisting companies in creating sustainable competitive advantage through customer-centricity.

At the height of the dot com collapse I left Peppers & Rogers – as did some of my colleagues.  Yet, I have continued to follow the company as I have fond memories and am in agreement with what the company stands for: a customer centred approach to doing business.  So it is with interest that I read that TeleTech have bought 80% of The Peppers & Rogers Group.

What I find it interesting is that Peppers & Rogers has not been bought by a marketing agency. It has been bought by a company that specialises in outsourcing including Customer Management Outsourcing.  How times have changed!

When I worked at Peppers & Rogers (200 – 2001) I would never have imagined that things would turn out this way.  Those were the days of CRM.   At that time we did almost all of our consulting for the marketing function – typically the marketing director or the CMO.  Occasionally we did work for the Commercial Director and even the odd CEO.  Yet, the people who were in the driving seat were the marketing folks.

At that time I always envisaged that if anyone would buy Peppers & Rogers it would be a marketing agency.  And at the end of the dot-com collapse the UK arm of Peppers & Rogers was sold to Carlson Marketing – they used to own the Peppers & Rogers brand name in the UK but now it is branded Carlson 1to1.

CRM fell flat on its face because too many people in business are looking for the quick fix – the silver bullet – and the software companies (like Siebel) were happy to provide it.  Out of the ashes of CRM arose Customer Experience.

Today we live in the age of Customer Experience and in this age the marketing function is not the most important one.  Not by a mile – customers rarely decide to continue doing business with a company as a result of the advertising nor the direct mail pieces that land in the letter box.  In the age of Customer Experience the Customer Services function (and contact centres in particular) play a primary role: depending on which survey you read, some 70 to 80% of respondents claim their decision to stick with or leave a supplier is based on the service that they receive.  And a significant part of that service comes out of the contact centres. So it makes perfect sense that TeleTech has purchased The Peppers & Rogers Group.

I want to make it clear that I am not against marketers, the marketing function or even advertising.  Whilst I passionately believe that marketing and marketers have to embrace a completely new paradigm I also get the value that good marketing creates.  Good marketing contributes to the customer and adds to the bottom line.

One role of marketing – indeed advertising – is to add stuff that customers want and which is not in the product itself.  Think about the classic USA adverts for the Volkswagen Beetle – they took an odd-looking car and made it sexy.  Think about the Avis advertising – it took a number 2 position and made it into a virtue: we are No 2, we try harder.

Some brands – especially luxury brands – depend critically on good marketing: customers are buying status and the marketing has to continue to create that status.  Automotive insiders tell me that the quality of Honda cars is just as good as anything on the market yet no-one looking for status buys a Honda, they buy Mercedes, Audi, BMW….

What flavour of customer centricity are you practicising?

I have been thinking that the term ‘customer centricity’ is totally meaningless.  Like strategy there is no shared agreement nor definition nor theoretical foundation for ‘strategy’.  So the coin of strategy has become debased – people in business use it whenever they want something to sound important.  I believe the same applies to customer centricity.

Thinking further I can distinguish various flavours of ‘customer centricity’:

Website personalisation (usually through a platform like ATG)

  • In this instance, customer centric means that we push content to you that either you have declared that you are interested in (preferences) and/or we believe that you are likely to find interesting.  The Amazon website is a great example of this.

Direct marketing on steriods

  • Within this school, the emphasis is on collecting as much data as possible on customers (demographic, psychographic, behavioural, transactional…) turning this data into targeting list – those customers most likely to buy the product that I am interested in selling – using data mining techniques to build predictive models.

Customer lifecycle marketing

  • Here customer centric means pushing out the right flavour of communication to the right customers at the right time.  And it involves taking a time perspective: where is the customer in his journey and what communication makes most sense. This flavour also relies on collecting lots of data on customers.  And it more likely to be practiced where an organisation has a broad range of products that can be sold to the customer.  It is also more likely to be practiced where the customer has to be kept ‘warm’ because of a relatively long interval between purchases.

Prroduct development / user experience design

  • Here the emphasis is actually on spending time with customers (or the people who we want as customers) to really get these people.  How they think, how they behave, what outcomes they are after, what gets in the way etc to design better products and better interactions between the customer/user and the product – in some cases the product is the website / virtual store.

Customer service

  • As customer service is viewed as a cost by many organisations, here customer centricity can mean “How do we recoup some of these costs by using inbound interactions to sell stuff to customers?” Or it can mean how can we get the most value from our contact centre agents by having them make outbound sales centred calls when they are not busy
    dealing with inbound contacts.  Often it means how can we reduce costs by getting the customers to do the work of agents: drive them to the website or the IVR.
  • The organisations that push the envelope here – very few –  view customer centricity as learning what drives calls to the contact centre and using this insight to effect change in the business operations that are failing the customer and thus driving demand into the contact centre.  They get this is win-win proposition: the company has a great opportunity to cut costs and improve the customer experience if business operations are redesigned.

Customer experience

  • This flavour has not yet crystallised.  Nonetheless, customer centricity here tends to mean a focus on interaction design in the form of ‘moments of truth’ and ‘experience as theatre / entertainment / engagement’.

I am sure that there are more flavours.  What I find interesting and which I wish to point out is that it can be argued that none of these flavours constitute ‘customer centric’.

It can be argued an organisation that is customer-centric is an organisation that is hell-bent on creating superior value (economic, interactional, emotional, social) for its customers.  It is an organisation that is willing to sacrifice short term gain if it is at the expense of customers (‘bad profit’) to create long term sustainable gain (‘good profits’).

Do you know of an organisation that is practicing this last  form of customer centricity?  If you do then please share with me.

Dear customer this is what we mean by “relationship”

If you take the time to read the articles that gave rise to the “Relationship Marketing”, “CRM” and “Customer Experience” movements there are a number of principles that lie at the core:

  • Work relentlessly to create superior value for your customers;
  • Treat different customers differently because different customers have different needs;
  • Treat different customers differently because you cannot afford to spend the same amount of money on ‘Economy’ customers as you can on ‘First Class’ customers – to use an airline metaphor;
  • Treating different customers differently includes adjusting your actions towards the customers on an ongoing basis as you learn more and more about them – some called this customisation, websites call it personalisation, others understanding it as tailoring your actions to suit the person in front of you; and
  • If you do this consistently and better than your competitors, your customers will continue to do business with you even when they are offered ‘incentives’ (usually in the form of price discounts) to switch to your competitors.

The interesting thing about human beings is that we cherry pick – we take what we like and completely discard the rest.  It is as if you are given a recipe for a great dish and you select some of the ingredients and just throw the others away because they disturb you in some way.  As a result of this, too many companies – but not all, have come to understand “relationship” in a totally self-serving way.  If they were being truthful they would write a letter along the following lines:

“Dear Customer

Welcome to Big Corporate, we are delighted to have you on board.  We are not like Apple.  We don’t disrupt industries; we do not even come out with must have products; our service levels are also pretty ordinary as we do the minimum we can get by with to keep a lid on costs. The reality is that we are pretty much like everyone else who competes for customers in our category.

Over the last ten years or so our world has turned upside down.  And it is all down to the Internet – it has given you shoppers the upper hand.  Not only can you compare prices easily, you can also share your voice with millions around the world and listen to your fellow shoppers instead of our corporate speech: our advertising and PR.

So we listened to the Relationship Marketing and CRM folks.  We have bought into this in a big way and invested many millions in the software that will enable us to build a relationship with you.  Why is that important you ask?  Well if we build a relationship with you then we get to make more money, more profit!

Let me explain what we mean by “relationship”.  We are thinking along the following lines:

  • We will get as much data on you as possible – anything we can get away with legally;
  • We will use that data to figure out what we can sell you and then we are going to send you letters and emails  to encourage you to buy what we think you are up for buying;
  • If you do not respond the first time then we will give it another go and then another go;
  • We will offer you these products at a higher price than the price that we are offering people who currently do not do business with us;
  • If your existing product, policy or subscription comes to an end then we will send you a renewal reminder that is some 30% higher than you could get if you were to sign up as a new customer through our website;
  • We want you to fit in with the way that we work, the way we do business;
  • We are expecting you to do more of the work yourself so it would be great if you were to go to our website and help yourself and if you do manage to call our Customer Service line then we expect that you will use our IVR to help yourself;
  • If you do manage to get through to one of our agents then we cannot guarantee that we will be able to sort out your issues there and then.  If we cannot sort out your issue then we expect you to ring back on another day as our agents are not allowed to ring you back at a time that suits you;
  • We really do not like complaints as we believe that we are doing the best that we can so we are going to make it as hard as we can for you to complain including insisting that you put your complaint in writing and send it via the post;
  • Even though we are in the digital age we are not going to allow you a click to chat facility for when you are having problems on our website and need our help;

  • Nor are we going to allow you to use an instant messaging system to get through to our agents;

  • Whilst we do allow you to send email don’t expect the kind of response that you get at work. No, please allow at least two-day – usually more.

Now that I have explained what we mean by relationship we are really hopeful that you will be so satisfied that you will tell all your friends and family to become our customers!”

 
Here is the ridiculous part:  no company would ever consider sending this kind of communication to a new customer yet that is what the customer will experience because that is how many companies operate!

Bewleys shows that an organisation with strategic assets can deliver a poor customer experience and get away with it

With my colleague Mel in the front passenger seat, I was headed to the Bewleys Hotel at Manchester airport on Tuesday evening.  I was driving in the dark whilst the rain poured down and I would have appreciated some help in finding the hotel.  The first thing I noticed was that the hotel was not signposted like say the car rental agencies are often signposted to help drivers to drop off rental cars without much fuss.  Nonetheless, Mel was able to help me get there the second time around. 

Soon after check in I faced my second hurdle: finding my way to the lifts.  The lifts were not next to the reception area and they were not signposted.  So I spent several minutes exploring here and there and eventually had to ask a Bewleys employee for directions to the lift.  She met the functional need by pointing towards the lifts but not the emotional need as she was cold and gave the impression that she had better more important things to do then to help a customer. 

I got settled into the room and took a bath.  Upon getting out of the bath  I grabbed for the towel and noticed that the bath towel was quite small, it was torn and against my skin it felt rough.  Later that evening as I got into bed the sheets felt rough against my skin and I wondered what kind of hotel can get away with not getting the basics right.

The next morning as I was about to leave my room to go down for breakfast I found that the door would not close.  The top half of the door was hitting into the door frame so it would not close.  It was clear that the door had to be repositioned so I rang Reception and handed the problem over to the young man who came to take a look at it whilst I walked out with my computer and headed to breakfast and onto work.

The next day after a long day at the office I returned to Bewleys, looking forward to getting into my room and having a relaxing bath.  So imagine my upset when my keycard did not work.  As Mel had a room on the same floor and she was making her way to her room she pointed out that the keycard had most likely only been coded for one night;  Mel had encountered that problem when she went to use the fitness room. 

I made my way downstairs and then ended up waiting in line for about 15 minutes to get to the hotel receptionists.  I was tired and distinctly unhappy by the time that I got speaking to the young man at Reception.  When I told him that I could not get into the room and that I was not happy at having the problem with the door in the morning and then not getting into my room he simply said “The key card has probably only been coded for one night”.  When I asked him why it had been coded for one night when I had been checked in for two nights he responded “It is a common problem”.  

So here is a hotel that is difficult to find.  A hotel in which many people struggled to find where the elevators were as they were a long way away from Reception and not signposted.  A hotel which did not provide good quality towels or bed sheets.  A hotel where the staff, on the whole, were doing the tasks assigned to them but who did not show any affinity for their customers.  A hotel where it was simply accepted that staff would code the keys for only one night even if the customers were staying more than one night. 

Yet the hotel was busy – there were plenty of people checking in, plenty of people in the bar and the restaurant and plenty of people leaving in the morning.  So neglecting the basics is clearly not driving this hotel out of business.

How is it that this hotel can get away with it.  The answer is simply: location, location, location.  The hotel is one of only a handful of hotels that are right next to the terminals so there is a lot of demand for hotel rooms.  Next, the hotel had matched its offer to the customer segments that were using the hotel.  Bewleys attracts people who are not willing to pay the kind of price that the Hilton, the Crowne Plaza and the Radissan SAS demand. 

To conclude: when you have a strategic asset which drives traffic to you, where there are formidable barriers to entry and where you match the offer to the customer segment that you service then you can get away with delivering an OK, even a poor, customer experience!  Isn’t something similar at work when it comes to financial services, software and hi-tech companies.