In his latest post Andrew Rudin questions the advice of customer experts and provides his take on the language that has come to pervade marketing, sales, service – business in general. Allow me to share a passage or two from his post:
“We’re bombarded with messages from experts about getting close to customers. How close? Really close! Lustful words like embrace, love, and passion have migrated from romance novels into business blogs. Marketers freely infuse love as a marketing schtick, with buyers as the intended objects. But when sellers get amorous, I remember the words to Are You With Me Baby? by the LeRoi Brothers: “At least tonight, you know that I’m in love with you.” Explanation, not needed.”
In this conversation I wish to look beyond the fashionable language and see what shows up. Let’s start with the role of the customer in business.
What Is The Role Of The Customer In Business?
Let’s look at business as a system for creating value. The first question is this one, who truly matters? Look into the very constitution of company and company law. You will find it is the shareholders – specifically the shareholders who individually or collectively control the voting rights. Next question, what is the ONLY concern of shareholders? Wealth. Shareholders of the business are looking for the Tops (at the helm of the business) to generate wealth for them .
Which brings us to the role of customers. What is the role of customers in business? I say it is to enable the business to survive and thrive by feeding the business. What do I mean by feeding the business? I mean to provide the money that the business needs. Put differently, customers are the source of cash that flows into the business and keeps the business going.
What can we conclude? How about this, a customer is only of importance (valuable) if s/he is source of cash flowing into the business.
What Is The Extrinsic Value Of A Customer To A Customer-Centric Business?
Anyone who truly understands the genesis and true meaning of customer-centricity will be familiar with Customer Lifetime Value (CLV). How does one calculate CLV? Be estimating a figure for the lifetime (years, months), then estimating the value (revenue, contribution..) that this customer will generate for the business over the lifetime. The smarter folks will discount the value to take into account the time aspect of money.
Here, I draw your attention to a critical point. The past does not count, only the future counts. What the customer has contributed to the business in the past is irrelevant. It is only his value to the business in the future that counts.
Why calculate CLV? To differentiate between customers. In my days at Peppers & Rogers it was the done thing to perform the calculation and then put customers into three buckets: MVCs (most valuable customers), MGCs (most growable customers), and BZs (below zero). And the corresponding ‘strategies’ were to retain MVCs through great service / preferential treatment, increase the value of MGCs by persuading them to buy more at higher prices (x-selling, upsetting), and get rid of the BZs as they were taking value away from the business.
What is going on here? Pure self-interest. As Tops we wish to enrich ourselves – earn and walk away with the greatest wealth for ourselves. To do that we must please the shareholders. To please the shareholders we have to generate as much as value as we can. To do that we need to focus on customers – those customers who hold the promise of generating the most value for us ‘today and tomorrow’.
Here I wish to add that the drive to automate interactions between the customer and the business saw its genesis in the promise of technology to cut down the cost of customer interactions by replacing employees with technology. By cutting down the costs the value generated by customers, as in CLV, could be increased – sometimes substantially. The fact that automation of interactions led to benefits to customers was an added bonus – not the primary motive. Disagree? Then answer this question, why have IVRs proliferated rather than being ripped out? Customers hate IVRs and have hated IVRs for years.
What Value Does Business Place On The Intrinsic Value Of A Customer?
Look beyond the label of customer. What do you see? I see a human-being – a flesh and blood human being. Is there any intrinsic value to a human being. Let’s take a look at that by examining real life examples.
When I see a pregnant woman, a fellow human being, standing on a train, I offer her my seat. Usually I don’t even get to do that. Why? Because some other man or woman has offered her a seat by the time I open my mouth.
When I see an elderly wo/man with what looks like heavy luggage I offer to carry that luggage up and down the stairs – usually at train stations. I do so without being asked.
Once I was in a Deli – some 10-15 years ago. Whilst ordering lunch (sandwiches, drinks…) I notice a young lady. She was not dressed well. She had a handful of coins and she was counting them. She looked hungry – I saw her face looking at the product. Yet she ordered a tea. I calculated that this was the case because she could only afford a tea. All this happened in seconds, maybe a minute or two. Immediately, I took out £20 and gave it to her.
When it comes to birthdays and Christmas, I ask folks not to give me presents. I tell them if they wish to contribute to me then they should do so with cash. Do I need the money? No. So why do I ask for it? Because I get joy out of putting that money into Kiva and then using it to fund folks around the world, who have ideas but lack the money, to build better lives for themselves and their loved ones.
Am I the only one doing these things? No. One of the people I value highly is the President of a leading player in the VoC market. He travels a lot. When he travels he helps folks put their luggage in the overhead compartments. It is not an option for him to not help those who need help. And he gets joy out of this.
I suspect you, also, have at some point in your life carried out an act of kindness. If not, then I suspect you have read about, seen or witnessed an act of genuine human kindness and been moved by it. Why?
Here is my answer. We ‘know’ at some deep level that there is intrinsic value in a human being – a human life. Why? Because, for the most part, most of us are brought up that way: to value human life, to treat folks right….. To be helpful members of society. What is heroism but the sacrifice of oneself for the wellbeing of our fellow human beings?
What about the business world? Does the business world of largish corporations recognise and honour the intrinsic value of a customer as a fellow human being? Look into this and you will find that aside from small scale community based ‘mom and pop stores’ there is no genuine relating between the business and the customers. A small ‘mom and pop store’ where mom and pop work will get to know their customers: their backgrounds, their family, their hopes and dreams, their challenges…. their intrinsic value. Not so the case in corporations where the roles remain but the folks that fill those roles is like hotels: the rooms are the same but occupied for short periods of time by many guests. Further, and this is important, genuine human relating is not permitted in corporations. What is permitted, even encouraged, is fake relating: scripted interactions, scripted smiles…
When is the last time that a largish corporation paid for life-saving treatment for one of its customers? Or took actions that take time and money to make a customer’s dream come true? Yet some celebrities have done exactly that for their fans. And folks in communities get together to do that if one of their own is in need.
No, the business world of corporates is blind to the intrinsic value of a customer, any customer. The only value that counts is the extrinsic (CLV) of the customer – however this is arrived at, whether by intuition or by making complex calculations. I, the corporation, do something for you if and only if the calculations shows that you will do something for me which is of higher value so that there is good ROI for me.
Without friendship life is hollow which is why almost all of us seek and cherish our genuine friends. Without love for some person or some activity life is missing something essential. Without being loved by someone or some community life is missing something that is essential to our well being.
So relationships do matter. Love does matter. However, it would be foolish to expect this kind of relating occurring between a customer and a corporation. And experts/gurus encourage companies to love customers is pure BS.
Yes, the language that folks in business and those who make a living from pandering to businesses (the media, business gurus, consultants, professors…) has changed. It speaks of customer engagement, customer relationships, loyalty, customer love….
No, the game of business has not changed. The game is the same as it has always been – causing ‘surplus rents’ for Tops (in the form of pay, bonus, shares) and Shareholders. All the Customer talk is doublespeak – it disguises the transactional orientation, it disguises the lack of morality and ethics in big business.
I leave you with this thought / assertion: It is easier to change the words, the images, the slogans, the story than it is to change the system (purpose, values, priorities, people, roles, relationships, practices, tools…). Therefore, in the absence of a catastrophic breakdown, only the words, image, slogans, and stories change.
I thank you for your listening and I wish you the very best. Until the next time….