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Why do companies fail to be customer centric?

Epic Customer Service Failure

I recently had the opportunity to deliver a keynote address at a large conference in San Diego. At the start of my talk one of the questions I like to ask the audience is:

“How many of you recently had a bad customer experience?”

More than 100 hands went up (probably 80% of those in the room). While this may sound dramatic, sadly it’s not unusual. Poor customer experiences are going to happen with any company you do business with at some stage. However great companies realize they will not get it right every time and make proactive preparations to deal with things that may go wrong.

Unfortunately the company in this next example fails multiple times on this front. It clearly does not have a customer centric culture. (Before you read on – full disclosure I have been a customer of this firm and this is based on my own experiences).

I am not going to name and shame the company but rather use it as an example of what not to do in business. It is a large fully integrated, international property and infrastructure group headquartered in Australia.

We are not talking about large corporate or commercial projects, but residential housing. The firm has has a number of residential housing projects around Sydney, Australia and no matter who you talk to, the experience has been bad. Poor project management and supervision of contractors and sub-contractors has resulted in countless defects. Now it’s not all bad – they do fulfill their legal obligations to fix defects thoroughly – so long as you are prepared to wait for them to do it at their convenience.

The thinking is: “we will get a painter, plumber or electrician to your house to fix the defect when there is someone in the area – or if we have several jobs to do in your area that we can group together”. Forget the fact that the hot water system has gone – you can wait 3 days before it is convenient for them to come. Forget the fact that the job of fixing a leak is half done – it can be weeks before it is completed. That is just the tip of the iceberg. Lack of response to consumer requests, poor communication and lack of a “customer perspective” all contribute to the heartache.

Yet this firm espouses some admirable core values – respect-collaboration-integrity-excellence-innovation.  However it’s vision: “to create the best places, supports our strategic direction to be the leading international property and infrastructure group” is predominantly internally focused.

Nowhere do we see the word “Customer”.

This firm reflects a retail building industry that is self-centered, arrogant and self-serving. Clearly not all building businesses and contractors operate in the same manner. But it shows what happens with large businesses that are focused on profit at the expense of the consumer. It results in dissatisfaction, anger and frustration on the part of the customer.

This firm and others like it have a huge change to make if they are to have any hope of delivering a consistently good customer experience. The start must come with senior leadership who need to find out what is going on and understand what many consumers experience. It’s called “eating your own dog-food”. If some of the senior leadership had the same experience with their own homes as many consumers they would do something about it. Then a customer-centric culture needs to be embedded throughout the organization – not just lip service, but real change of mindset and actions that create a much more positive customer experience.

There is a clear roadmap for this in the book – The Customer Culture Imperative – if leaders in these large businesses care to look. But then again while the business is profitable “who cares”?

This type of short-term thinking will only make things harder for businesses like these in the future, when new players exploit their lack of customer understanding and care.

 

Why real-time customer feedback is the future for customer centric companies

Feedback

Companies have been measuring customer satisfaction levels for many years and yet many of these same companies have not seen significant improvements or changes. One of the reasons is customer satisfaction research has been a static activity. Satisfaction levels are measured once a year or less frequency. The data is discussed and reviewed but is not integrated or used to drive business decisions. The result is a lack of action. Even worse customers make complaints which companies then try to address weeks after any useful resolution is available.

In fact this cycle of asking customers for feedback and doing little or nothing with it is one reason why most customers don’t respond to surveys. Why should customers spend the time providing feedback when nothing meaningful will be done?

One of the challenges facing companies trying to implement a more real-time approach in the past has been limited resources to apply to the challenge. Real time has required surveys been run more frequently and systems to be available to provide that feedback to the right people at the right time.

Thankfully with the technology available today, a number of companies are providing customer centric organizations with new tools to gather insights and feedback on the go.

A great example comes from the healthcare industry, more specifically hospitals. Patient Experience is something that Hospitals can no longer ignore as a large percentage of their at-risk income under the affordable care act comes from their patient satisfaction levels.

Eric LoMonaco, a great patient centered leader, from the Community Hospital of the Monterey Peninsula (CHOMP) in Monterey recently implemented a real time feedback program using QR codes placed strategically around the hospital.

qr-code used for feedback

The challenge they faced was satisfaction was measured by an external body that would provide reporting after the fact. The result was patients left the hospital with problems that were never addressed. Eric saw the opportunity to implement a system that would allow CHOMP to gain real time feedback that could be directed to leaders in the hospital and responded to in real time.

The impact of this system on patient satisfaction levels has been dramatic and immediate. By scanning a QR code or simply sending a text message directly to a leader in the Hospital, Patients are able to provide real-time feedback that leaders can address immediately as issues arise rather than after the fact.

Eric shares the results CHOMP has been achieved so far in a great article he wrote here and a webcast here.

With this type of technology available, the excuses for real-time customer satisfaction improvements are running out.

It is the combination of a customer centric mindset, coupled with technology and processes that will determine the winners in today’s business environment. To learn more about creating the right culture in your business, check out our book, The Customer Culture Imperative.

How does your business compare with America’s 3 worst industries?

Frustrated Customer

The state of customer service in 3 US industries is driving customers to distraction.

3 Industries That Desperately Need Customer Service Makeovers

In 2014 Comcast, the cable company, “won” the annual Worst Company in America competition as voted by Consumerist readers. The state of customer service has been so bad for so long that consumers are skeptical to new announcements about improving customer service. Even the recent announcement that a long serving executive, Charlie Herrin, has been appointed as Comcast’s new senior vice president of customer experience has been met with some derision.

The related industry of pay TV-Internet providers including Time Warner, DirecTV and Verizon is also known for poor customer service and consumer complaints that the industry players lack real competition.

Studies also show how frustrated and dissatisfied consumers are with wireless providers including AT&T, Verizon, T-Mobile and Sprint. A vote at Ranker.com placed AT&T at the top of the list of “Companies with the Worst Customer Service.”

These 3 industries are the tip of the iceberg. There are many more that deliver a poor customer experience and do not seem to be able to overcome the roadblocks.

Is your company like one of these? Are you finding roadblocks to improving customer experience across all the organizational touch-points you have with your customers? The chances are that you do not have buy-in from all parts of your business, other priorities are taking precedence and your customer experience is not improving at the rate or level that you want.

What’s your response? Are you adopting an ad hoc approach to plugging the weaknesses which is eating up all your time and showing little progress? Are you spending time at endless meetings trying to persuade cynics of the importance in taking a “customer” approach or are you really looking for a solution that works?

There is only one way to get a solution that counts and can be sustained. You must first identify why customer experience is poor. To do this you must get insights about your customers’ needs and behaviors and what you must do to deliver value that satisfies them. There is only one way to act on this – to identify weaknesses in your customer-focus culture and take action to strengthen it. If you don’t act on this you won’t fix customer experience problems. We have found through extensive research that the right action to strengthen customer-focus culture will provide your business with valuable insights that will improve customer experience and increase customer retention and revenue.

How? You must start by measuring your customer-focus culture. If you don’t measure it, you can’t manage it. This will show the source of your customer experience problems and create a focus for all in your business and relevant functions to act on a permanent solution. It will galvanize buy-in from those areas that are resistant. There are usually clear, simple and quick actions you can take. These actions will strengthen the customer experience mindset and habits around creating more value for customers with enhanced customer experience.

If Comcast is finally serious, its new senior vice president of customer experience will need to take the actions proposed above. If he wants a proven roadmap and methodology to introduce real customer-centric change into Comcast he can find it in The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance.

Is your business model under threat and your survival at stake?

Business Model Threat

In any large successful business today parts of the business are performing well while other parts are ailing. Multinationals like Ford Motor Company and Starbucks are performing well in some countries, but not in others. Samsung and Ikea have high market acceptance of some products, but not others. But, what’s important is to determine if your core business model is under threat. If it is, your very survival is at stake.

Consider what is happening to the traditional postal service corporations like the US Postal Service (USPS), Royal Mail (UK) and Australia Post. Virtually all national postal services originated from government owned and legislated monopolies when letters were the primary source of written communication. These organizations created thousands of bricks and mortar post offices and shops, a large transport infrastructure to deliver letters using thousands of postal staff. The digital revolution has changed all that – letter volumes are declining rapidly, with consequent ongoing and growing losses for incumbent mail services. The business models of traditional postal corporations are under attack from all sides.

Take Australia Post. Like many postal corporations it has developed a growing profitable parcel delivery service fuelled by online consumer purchasing. It is providing new services like its digital mailbox for business and consumers. But profits from these new lines of business are being eroded by losses in the traditional letter delivery business and from competition. Both Singapore Post and Japan Post have purchased courier companies to compete in the Australian parcels delivery market. Also Uber Rush is allowing people to order pickup and delivery of packages using the Uber app. Last year Volvo trialed a service called Roam Delivery that allows retailers to drop off merchandise inside your parked car. All of this adds up to intense competition for Australia Post. Much the same is happening to US Post and Royal Mail as well as other incumbent mail and postal services around the world.

How can organizations like Australia Post survive? They must develop and strengthen a customer-centric culture as the foundation of their organization and as a basis for long-term competitive advantage. This means that they must have strategic alignment with their markets and customers where an understanding of current and future customer needs and current and potential future competitors is factored into their strategies and supported by everyone in the business. This knowledge and mindset must become embedded in all of their businesses and throughout all functions in their organization to enable them to become more agile, competitive and innovative to create superior value for their customers. That in turn will help to drive ongoing growth and profitability.

The postal organizations around the world seem to be at different stages on the journey to customer centricity. New Zealand Post is probably one of the most competitive being one of the earliest to have its mail service deregulated in 1998. It is now two years into a 5-year transformation plan and is showing improvements in overall profitability. USPS lost US$5.5 billion in 2014 despite its growth in package services and has a lot of ground to make up. Australia post is profitable, but profits are declining from the impact of mail service losses and there is now a strong focus on developing a customer culture.

Is your business model under threat? You can measure where you are in terms of customer centricity and what stage of the journey you have reached by exploring the roadmap provided in the award winning book: The Customer Culture Imperative: A Leader’s Guide to Driving Superior performance.

Why should a monopoly be customer-centric?

Monopoly

If you operate a monopoly you can dictate what customers get, when they get it and what price they will pay. Legislated monopolies like water and power utilities, letter mail services and cable companies with geographic monopolies have held customers to ransom and traditionally have just paid lip service to customer service.

Why should that be any different today? Well there are some good reasons why these monopolies should start to think deeply about their customers’ needs and strive to provide more value to them – that is, to start becoming customer-centric.

First, disruptive technologies and indirect competitors are changing the way consumers behave and what they value. Both US Mail and Australia Post are experiencing substantial and growing losses in their mail services as people communicate digitally. The businesses of cable companies are feeling the inroads of satellite providers and digital entertainment services streamed directly to consumers’ smart phones and mobile devices. Water authorities are facing existing and new competitors that are adding value to the basic water supply. The bottled water market is huge around the world. New technologies to tap sea water for use in irrigation are in their infancy but will impact the traditional water authorities over time. Solar technology, power generation technologies for businesses and subsequently homes are having an impact as alternative sources of energy.

Second, monopolies are under pressure to become more efficient by regulators and government stakeholders to reduce duplication and waste and make better asset resource decisions dictated by the future needs of consumers and continuous pressures on the public purse.

Finally, unhappy customers resisting price rises and poor service are becoming vocal and this translates into lost votes for politicians.

The Water Services Association of Australia (WSAA) is the industry body that supports the Australian Urban Water Industry. Its members and associate members are monopolies that provide water and sewerage services to approximately 20 million Australians and many of Australia’s largest enterprises. Its members have defined the vision they want to achieve by 2030 as:

Customer driven, enriching life. 

Many of the individual water utilities are embarking on a customer-centric initiative to develop a customer culture within their organizations. There are strong customer-centric behaviors in parts of their organizations, but senior leaders realize that many of the traditional functions in their utilities are internally focused. The best starting point will be to benchmark all the functions in the utility to measure relative customer centricity strengths and weaknesses using a tool such as the Market Responsiveness Index. This will highlight “bright spots” in the organization and help create focus for specific initiatives to develop customer centricity.

If you are in a monopoly position, are you considering how to develop a more customer responsive organization – not just through improved customer service, but as a customer culture? You can find a roadmap to help chart your course in our award winning book: The Customer Culture Imperative

Why are Tesco, McDonald’s and Woolworths Supermarkets Losing their Leadership Positions?

businesses_losing_their_way

Tesco, the British based supermarket chain, has shocked analysts with an overstatement of profit expectations by 250 million pounds and questions have been raised about accounting irregularities. This problem reflects an underlying decline in its market position. 

McDonald’s, the dominant American fast food chain for decades, is now losing its market share, experiencing deteriorating margins, a lack of success with new products and reduced sales growth.

Woolworths, Australia’s leading supermarket chain, is being overhauled by challenger Coles as it experiences slowing sales growth and a customer perception that it is losing its price competitiveness.

Customer resistance, competitive price cuts, shrinking profit margins are just symptoms of a much deeper problem. These signs obscure the real issue – these market leaders have lost their customer focus that in turn has had a negative impact on customer perceived value and customer experience. Even more fundamental, they have not embedded a customer culture that incorporates the customer insight and foresight needed to be proactive with relevant new offers that will enhance customer retention, loyalty and growth. It is this that will sustain ongoing growth, share and profit. This issue is symptomatic of many large businesses that have focused on processes, technology, cost cutting and profit margins at the expense of building and embedding a strong customer focused culture.

There is only one way to act on this – to identify weaknesses in customer culture and take action to strengthen it. Extensive research shows that the right action to strengthen customer culture will provide any business with valuable insights that will lift customer experience, increase customer retention and grow revenue. You can find more on this relationship in our book The Customer Culture Imperative.

The starting point is measurement. Retailers like Tesco, McDonald’s and Woolworths measure just about everything – financial, sales and costs metrics. But they don’t measure customer-focus culture with the same rigor. If you don’t measure it, you can’t manage it. This will show the source of customer experience and market share problems and create a focus for all in a business to implement value adding strategies founded on clear customer insight and foresight.

More and more companies are using a validated customer culture measurement tool called the Market Responsiveness Index that benchmarks those customer, competitor and strategic alignment factors that drive future performance – customer retention, innovation, new product success, revenue and profit growth. If Tesco, McDonalds and Woolworths want to retain their leadership, they should do the same.

How to generate customer insights without another survey!

starbucks_ideas

While surveys are useful at collecting information on customers and how they feel about certain interactions, products or services there are other ways to gain meaningful insights.

First let’s define what we mean by customer insights:

Customer Insights Defined: a deep understanding of a customer’s needs and behaviors—both known needs that the customer can identify, and the latent needs that they cannot.

It also helps to begin by framing the type of customer insight you are looking to uncover. There are 4 main categories of customer insights that are useful to driving business performance.

1. Strategic Customer Insights – these are used to inform the company’s strategy by understanding what unique market segments exist in the marketplace. For example in the telecommunications industry there are a wide range of different types of customers with unique needs. Some customers now use smartphones as their primary internet device, their needs will be different from customers that still use cell phones primarily for phone calls and text messages.

A deep understanding of the needs of different market segments allows a company to determine which segments are most attractive. This customer insight also allows a company to identify where it needs to improve its own value proposition in order to attract and retain customers from each segment.

2. Program Specific Insights – these are insights specific to a component of a business strategy. For example, a manufacturer looking to roll out a training program to its retailers would need insight into the most effective methods to educate retailers. Should training be conducted in person, via a webcast or through a self service portal?

3. Product and Service Insights – these are direct inputs into how products or services could be improved. A great example of this in action is “My Starbucks Idea”, an online brainstorming tool driven by customers. Customers share ideas and other customers can vote on them so the best customer driven ideas rise to the top.

4. Insights for Marketing Communications – understanding what media and mediums customer’s use to get information informs how companies can more effectively reach and communicate with potential customers. For example if the customer group in question is predominantly focused on using social media, understanding which social media platforms they are most engaged in will help direct communication resources.

So now to the question of how to generate insights without surveys…

Customer insights can initially be generated from reviewing existing publicly available research and data as well as data internally available to the company. This often involves internal interviews with experts in markets and front line people that interact with customers on a regular basis. While this is useful it is secondary research, a review of what already exists and while it can generate new insights it is more useful for gaining alignment around what the company already knows about customers.

To gain deeper unique insights an ongoing process should be implemented that involves primary research. This doesn’t need to be complicated or only handled by marketing research profession in fact it is more impactful when people across the organization are involved.

Customer Immersion Activities

The most time and cost effective way to generate insights is to simply talk with customers. In today’s world this can include a range of mediums from one on one interviews to focus groups to online forums like the one Starbucks runs or Ideastorm, Dell’s equivalent.

Now I realize that technology products and coffee are highly engaging products with many willing participants, what if you sell toilet paper or a product that inspires less passion?

For these less inspiring categories a great source of insight can be customer complaints. Barbara Buchanan has written a great article titled “Mining Complaints and Negative Social Media May Have Positive Consequences” including some examples from the banking and manufacturing industry. The key is making it easy for customers to complain and provide feedback in real time, in the moment. For example a Hospital in California installed posters around the hospital with a QR codes. Patients can scan the QR code on their phones and immediately send a manager a message about an issue. Managers receive these in the form of text messages and commit to responding immediately and resolving issues as fast as possible. Patient satisfaction has doubled in the past several quarters as a result.

qrcodes_feedback

Going Deeper by Observing Customer Behavior

Ethnographic research can provide deep insights into people’s behaviors and unmet needs by taking a holistic view of customers in their own environment.

This is a more expensive technique but can yield unique insights. A great example comes from a day in the life analysis of  women cleaning their homes in Italy. A US company after failing to gain success with an all purpose cleaner for the home in the Italian market, undertook ethnographic research to understand why the product was failing. It discovered that Italian women spent 4 times as much time cleaning their homes than US women. They were fastidious and extremely house proud. They used specific cleaners for specific jobs as they believed an all purpose cleaner simply would not get the job done. These insights allowed the company to reposition the cleaner to focus on meeting a more specific need – benchtop cleaning. The repositioning resulted in a much more successful launch into the italian market.

Piloting New Products or Services

This involves putting new products or services in front of customers to gain direct feedback. A modern version of this can be seen on websites like Kickstarter, where entrepreneurs and intrapreneurs can essentially describe a product or service and raise funding for the idea. This is really the ultimate way to test concepts, will customers pay for it? One of the most successful products launched on Kickstarter is the Pebble Watch. It launched 18 months prior to Apple announcing their own iWatch. It is now raising funding for its second version and has raised almost $10 million to date.

Mining Social Media

The last incredible source of rich customer insight exists within a wide range of social media including Facebook, Twitter, LinkedIn, Yelp, Pinterest and other online communities. There are a range of different companies that can help mine this online data and distill sentiment and feedback in a meaningful and actionable manner. A great list of the top 50 tools is provided here by Pam Dyer.

While surveys remain a great way to elicit direct feedback on specific topics of interest to the company, there are many other ways to generate insights that should be incorporated into every company’s way of doing business.