Extreme Trust: can honesty be a means of competitive advantage? (part 1)

I enjoy reading what Don Peppers and Martha Rogers write.  In fact their point of view spoke to me in such a way that it called me to join up and become a part of  The Peppers & Rogers Group, for a while, back in 2000.  Don and Martha have published a new book Extreme Trust.  In this series of posts on trust I am going to share with you, comment upon and explore topics that are addressed by Don and Martha in their book.

Does trust matter?

Why don’t you take the salesman at his word and buy what he is selling you?  Because you have learnt that what is in the interests of the salesman, to make a sale and take our money, is not necessarily in your interest.  Why don’t you accept the advertising put out by companies?  Because you have learnt that advertising, as a whole, is not truthful – you know that it has been designed carefully, purposefully, to push your buttons so that you buy.  Put differently you simply don’t trust the advertising.

Trust matters.  Why?  Because our lives are tied up with each other.  Heidegger pointed out that the fundamental being of human being is being-in-the-world – we are not spectators in the stands, we are right there in the midst the world.  Who is there right with us and an essential component of the world?  Our fellow human beings!  Our experience of living and how our lives turn out depends on how we conceive of one another (selfish, co-operative, selfless) and how we treat each other (help one another, look out for one another, indifferent towards one another, exploit one another).  Whether we trust one another or not matters, what we trust another with or not matters, who we trust and who we do not trust matters.

How will you compete against the likes of USAA?

Don and Martha start Extreme Trust by sharing a great story and asking a powerful question that gets to the heart of the matter. Let’s start with the story. It is about USAA a financial service company that consistently comes out as the most trusted financial services organisation in the USA.  The culture at USAA if based on a single yet profoundly powerful statement: treat the customer the way that you’d want to be treated if you were the customer.

After the first Gulf War (1991) USAA  sent out refund checks to several thousand “members” (customers).  Why?  USAA figured out that men and women (armed forces) serving overseas weren’t driving their cars in the USA, suspended the premiums for those months, and sent out unsolicited refund cheques when these men and women got back to the USA.  USAA did not have to do this and no-one asked them to do it.  How did this turn out?  Nearly 2,500 of these refund cheques were sent back to USAA by grateful customers who told USAA to keep the money and simply be there “when we need you.”

Now, here is the question that Don and Martha pose: “How will you compete against a financial services institution that customers love so much they sometimes refuse to accept refunds and are loyal into the third generation and counting?”

What makes USAA (and other companies like USSA) so different from competitors?

I have repeatedly asserted that most of what passes for customer-centricity is simply a sham.  Specifically, the philosophical base, the moral grounding, the fellow feeling, that is necessary for customer-centricity to show up as customer-centric, in the eyes of the customer as a moral being is absent.  This is what Don and Martha say on the matter:

“Most businesses and other organisations operating today think that they’re already customer-centric and they are basically trustworthy, even though their customers would disagree……. Being “trustworthy” is certainly better than being untrustworthy, but soon even “trustworthiness” won’t be sufficient. Instead companies will have to be trustable.

..trustability is a higher standard still.  Rather than working to maintain honest prices and reasonable service, in the near future companies will have to go out of their way to protect each customer’s interest proactively, taking extra steps when necessary to ensure that a customer doesn’t make a mistake, or overlook some benefit or service, or fail to do nor not do something that would have been better for the customer”

In short, USAA and companies like USAA (Amazon, Zappos, Apple, Google…) are trustable and as such they practice are built on the three pillars of trustability.

The three pillars of trustability

According to Don and Martha (in Extreme Trust) the three pillars (they use the term ‘principles’) of trustability are:

Do the right thing.  Essentially this is about the distinction between ‘good profits’ v ‘bad profits’.  Doing the right thing involves giving up practices (like exploiting customers) that generate ‘bad profits’.  And it involves coming up with a business model that generates ‘good profits’ by creating genuine value for customers by aligning with the needs and interests of customers and getting a fair return in exchange. Doing the right thing lies in the realm of leadership and strategy.

Do things right.  This is all about operations and operational excellence.  It is about the domain of management and concerns itself with functions, processes and details so that you make it easy for your customers to do business with you across the entire customer journey and generate the right kind of customer experience at each touchpoint that matters.

Proactively.  In Don and Martha’s words “Knowing that a customer’s interests is not being well served and doing nothing about it is untrustable.  Not knowing is incompetent…. A company might be scrupulous in its ethics, completely honest in its brand messaging, and highly involved in tracking its customer satisfaction, but will it be proactively watching out for its customers interests?  If it wants to succeed in the age of transparency, yes.

What gets in the way of being a “trustable” enterprise?

Why aren’t more companies, even most companies, like USAA, Apple, Amazon, Zappos and the like?   This is a domain I have tackled several times and I say it is addiction to ‘bad profits’.  What do Don and Martha say?

“The fact is that far too many businesses still generate substantial profits by fooling customers, or by taking advantage of customer mistakes or lack of knowledge, or simply by not telling customers what they need to know to make an informed decision.”

Why become a “trustable” enterprise?

Don and Martha are clear that companies don’t have a choice – the tide has turned, customers have the power, and by wielding this power customers will force companies to become “trustable” or die.  This is how they put it:

“.. lots of traditional, widely accepted, and perfectly legal business practices just can’t be trusted by customers and will soon become extinct, driven to dust by rising levels of transparency, increasing consumer demand for fair treatment, and competitive pressure…… Things that companies, governments, and other organisations never meant for people to know they will know.”

“Transparency will increase because of technological progress, and progress is inevitable.  It cannot be avoided or slowed down.….. As important as our social nature is.. social media and other interactive technologies have injected it with steroids.”

What is my take on this?

My thinking and philosophical orientation is in line with that being shared by Don and Martha in their new book Extreme Trust.  As such it is no surprise to me that I am enjoying reading it.  Nonetheless, there are areas in which I find that I am not in agreement with Don and Martha.  They make the distinction between “trustworthy” and “trustable” and in my world that occurs as contrived.

In my world you are either pregnant or you are not pregnant you cannot be half pregnant.  In my world, either I can trust you because I know that your care for me and are looking after my interest or I know that I cannot trust you.  In my world most companies do not merit my trust – I, the customer, simply show up as a wallet to be emptied.  And then there are companies that I do trust because they have done the right thing.  How does the right thing show up as the right thing in my world?  When the company takes a course of action that leaves me better off and it costs the company money. When I hear about what the company is doing to contribute to a ‘good world’.  When I hear about the postive experiences of other customers.

I am 100% in agreement with the power of transparency.  The potential for the kind of disruptive change that Don and Martha are speaking about lies in us wielding technologies that unconceal that which has been concealed from us.  Great example in the UK are the MPs scandal.  Once UK politicians used to lecture the world on honesty, moral uprightness and look down on less developed countries on the account of their corruption.  For many years the UK politicans got away with being corrupt and then the bubble burst.  UK politicians are not in a place to lecture anyone.  Another example is Rupert Murdoch and the News of the World phone hacking scandal.  For many years Rupert, some would claim, was the Kingmaker and pretty much got what he wanted.   He even got the Conservatives to hand him BSkyB on a plate.  Then came the disclosure that a dead girls phone was hacked and the moral revulsion of the ordinary folks forced a public enquiry on a reluctant prime minister, the closure of a newspaper and the abandonment of the BSkyB takeover.

In the next post in this series I will share more of what I learn as I progress reading through Extreme Trust.  I will conclude the series of posts with a review of the book as a whole so that you can decide if you want to read it for yourself.

The value of transparency or why I am no longer mad at BSkyB

Ok, you have just got a new customers and you want to keep that customer happy: you want to keep her and thus build an annuity stream from her.  Looking at the situation from a service centred (and I would argue normal human perspective) you have three strategies available to you:

  • Do your best to make sure that there is agreement on expectations and that you don’t create problems for your customer;
  • Make it easy for the customer to get hold of you by prominently displaying your customer services number;
  • If and when the customer contacts you then deal with her problem or complaint there and then with empathy.

Where is the leverage in this?  Surely the leverage is in the first of the three strategies: doing your best to ensure you and the customer have the same expectations and that you do not create problems for your customer.

So why is it that so many companies do such a poor job of this?  Let me give you just three examples:

  • I know of one brand name etailer that knows that their shopping process causing big problems for them and their customers and yet continues to do nothing.  When you place an order the website forces you to enter your credit card details leading you to think everything is done, settled.  Yet, this credit card data is only processed later when the ordered items are despatched.  As a result some customer payments do not go through because the card is no longer valid or because the details supplied by the customer were incorrect.  Of course this comes as an unpleasant shock to the customer who was left thinking that their credit card had been accepted  – when she had placed the order.
  • Mobile phone companies continue to sell mobile phones that they know have faults.  They know because they keep a track of which phones are failing and sent back by their customers.  They even know what the main defects are on these phones.  Yet they continue to sell them to new customers knowing that it will lead to trouble down the road!
  • When I joined BSkyB and took out a bundled (pay TV, broadband, fixed telephone line) package with BSkyB to simplify my life I found that it did nothing of the kind.  Whilst BSkyB did a great job of setting up Sky TV I had a horrid time getting the broadband set up.  And when I wanted to get the issue fixed or later cancel the order I found myself bouncing between different customers service teams and different customer services numbers.  In the end I was not able to cancel my order because I found out that I had actually been signed up for three different orders – each with different start dates, different end dates and different conditions!

What if these companies practiced transparency?  What might be the results?

Lets take a look at my BSkyB experience – particularly why it was that I was so mad with BSkyB and am not anymore.  What has made the difference?  Well as a result of research I now know what I did not know before.  Specifically, I have found out that:

  • BSkyB has made up of product divisions, TV belongs in one division, Broadband in another and so forth;
  • The contact centres for Sky TV are outsourced to one company, the contact centres for broadband are outsourced to another company and so forth

From this information I can now make sense of my baffling experience.  No wonder that I had to contact one set of people to get the TV services installed and another set of people to get the broadband set-up.  No wonder the SkyTV contact centres did not have a clue about the order I had placed nor about my broadband issues.  No wonder that the Broadband folks had no idea of my total order and were not able to deal with anything other than broadband stuff. 

Being a human I can empathise with the human beings who were on the end of the phone – in some of the most infuriating interactions I recognise that I was talking to the wrong people because I had a faulty map of the territory!

But why did BSkyB not make this clear to me?  Why did they give me the impression on their website that I could simplify my life by buying the bundle of products from them?  Why did they give me the impression that they would take care of it all and I would have a single point of contact?

If they had told me then it is possible that I might not have signed up and become a customer.  It is also possible that I would have signed up and very clear on what to expect and as such would not have experienced a horrid time dealing with BSkyB.

Yet I cannot help thinking that in a structure where customer acquisition is separated from customer retention, this kind of behaviour is simply what occurs.  So the access to transformation in behaviour is to change the structure: to integrate getting customers and keeping customers under the same person, the budget, the same department.

The core challenge facing the customer experience designer

From a customer point of view what matters is an ‘effective’ organisation – one that is good at anticipating and responding to the diversity of customers and their needs.  That means designing the organisation to be flexible, adaptable, versatile – this allows the organisation to absorb and effectively deal with the variety of demands that are placed on the organisation by customers.  This in turn requires the organisation to have ‘redundancy’ built into it.  That is a fancy way of saying that it needs extra resources (“fat”) to deal with and take advantages of unexpected difficulties and opportunities – to cater for the inherent unpredictability of the world.  Finally, making the parts work well together (integration) is a key requirement of effectiveness.  Think of a car it is only of value if all the components work well together.

Organisations are enmeshed in an ideology that values efficiency and structure that lends towards fragmentation.  The focus is on cutting out all the ‘fat’ so as to minimise operating costs and thus drive efficiency.   This way of thinking involves lots of efforts in up front forecasting and planning to predict and manage demand.  It also involves finding and standardising on the one best way of doing things and then striving to make customers, employees, suppliers and partners to use that one way.   This way of thinking encourages and insists that managers control the real world – at least their piece of it: to act on it so as to force it into the shape that was envisaged in the plan.

So customers want organisation to dance to their specific, individual, tunes.  Whereas organisations insist that customers fall into line – the line that reduces operating costs and thus maximises profitability.  That is how we come to the gaping hole between what customers want and what organisations deliver.

Sometimes the gaping hole gets smaller – at least for a while – when the organisation finds a way of being effective (customer perspective) by taking actions that improve efficiency.  Enter the category of self-service: ATMs, electronic banking, e-boarding card, well designed IVRs to do standard stuff like top up mobile phones come to mind.   At other times the gaping hole grows larger: sales assistants who know less about the products then the shopper, badly designed IVRs, waiting a long time to speak to a human being, call centre agents who are not in a position to help and so pass you on and then on again and so forth.

The fascinating thing about ‘social media’  is that it provides a great opportunity for organisations to be effective (from a customer perspective) whilst being firmly wedded to efficiency.  Yet, there is little movement in the direction of social media because there are a couple of things organisations are more wedded to than efficiency.  Secrecy, ownership and control – in every organisation lurks the dictator.  Again we have a divide: customers want organisations to be open, truthful, clear and collaborative.  Organisations are wedded to secrecy, spin, ambiguity, ownership and control.  And this divide explains why so few organisations have adopted social media to bring customers into the heart of the organisation.

So the challenge that falls to the customer experience designer is how to deliver the effectiveness, openness, transparency and participation that customers want whilst being embedded in an organisation that worships at the altar of efficiency, secrecy, ownership and control – sacrificing many customers in the process.  This is not an easy trick to pull off and it is why I have profound respect for all the people in organisations battling to improve the customer experience!

Using transparency to improve the customer experience

Wikileaks has been in the news and the whole thing about Wikileaks is that it makes transparent stuff that has been kept hidden from us.  In the UK we had the equivalent of the latest Wikileaks disclosure when MPs expenses were published.  And this has got me thinking on the following question: how can organisations use transparency to help their customers and themselves?

If I look at frustrating contact centre experience yesterday (how not to communicate) I find myself thinking that there is real power in the contact centre and the website working together to provide information that is valuable for customers.

For example, the website could display a real-time feed of customer demand and backlog that is hitting the contact centre.  Furthermore the website could make available all the historic demand falling on the contact centre – day by day, hour by hour.  And the website could provide charting / analysis tools to similar to the ones that financial websites provide if you want to take a look at the share price movements that day, that week, that month, that year etc.

If I had had that information I would have been in a better position to work out when to make contact with the call centre – typically when there is the lowest demand on the call centre and the most available capacity to take calls.

It is a fact that most of us tend to keep the promises that we make in public because we wish to maintain, even enhance, our reputation.  Companies can use transparency in the same way.  What if companies published the following on a daily basis:

  • the volume of contacts coming into the contact centre;
  • an analysis of these contacts by category – customers ringing in seeking information, seeking to transact, ringing up because they have a problem and need help to get it resolved, making a complaint, offering ideas on how the company can improve, complimenting the company;
  • how the company is doing in terms of SLA – from a customer and internal perspectives;
  • an analysis of the complaints by cause e.g. product issues, delivery issues, pricing issues, billing issues, service issues etc;
  • what actions the company has taken or is taking to deal with these issues and the impact these actions have made on customers and their experience –  hard statistics not fluffy talk with no commitments; and
  • customer satisfaction scores – versus last month, last year, against SLAs etc.

By being transparent the company would better engage with customers as it takes courage and commitment to make this kind of information available.  And the entire company from the Chairman down would have their reputations and integrity at stake:  that tends to be one of the most powerful motivators to fix the things that are broken.

Clearly, if customers can see that the company is taking things on that matter to customers and making progress – climbing up the hill – they are likely to support the company, even pitch in and help it to improve.

Any company, any executive,  that is truly committed to competing on the basis of creating superior value for their customers the kind of transparency that I have outlined above should occur as a wonderful opportunity to take the lead, to differentiate itself, to build customer engagement and to attract new customers by word of mouth thus cutting down on acquisition costs.  I wonder which company will go first and embrace this kind of transparency?