Category Archives: Case Study

78 Years of Customer’s Trust Destroyed in an Instant

vw_up_in_smoke

Source: The Economist

One of the most dramatic instances of breaking a promise to customers came during this past week as VW admitted to deliberately misleading regulators and customers about its car exhaust emissions.

More than 11 million vehicles had been fitted with software designed to trick emissions testers. What the hell were they thinking? Clearly not what we see from customer centric organizations that live by the motto – “What’s best for the customer is best for the business”.

If that one phrase had been part of the culture at VW it might have stopped what has turned out to be a multi-billion dollar problem. According to the Economist  they have set aside more than $7bn to resolve the issue.

This massive betrayal is not only going to impact customers but employees around the world will lose their jobs through no fault of their own. No doubt it will be a massive blow to the morale of those employees still left.

When companies align their interests with those of their customers both profit, surely it is the only way to conduct business in the future?

 

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.

Is Telstra Australia’s Amazon? – Its Customer Centric Strategy is Paying Dividends

Making Customer Connections

While some may argue you cannot compare a telecommunications company with an online shopping mega star like Amazon, I beg to differ.

There is one core element both companies now share – their absolute commitment to being customer centric.

In 2009 when David Thodey took over as CEO of Australia’s largest telecommunications company, Telstra, he was asked what would differentiate his tenure from his predecessors. He said:

“I want to be an agent for the customer”.

It was a time when Australia’s highest profile company was being criticized on all fronts for its arrogance, poor customer service, unjustifiably high prices and monopolistic practices.

Thodey set about changing the culture at Telstra to a customer focused culture and invested heavily in defining and communicating internally a vision, values and strategy that had the customer at its center and customer service as its catch-cry. It included intense training of its 5,000 people leaders in Australia, India and the Philippines as well as new systems and processes that empowered customer facing staff to provide much better service to customers and solve their problems with least fuss. A new division was set up that enabled staff who heard of a friend’s problem at a barbeque to give them a direct line to a solution if they were having trouble getting it solved. Telstra embarked on a program to create advocacy with its customers and its staff. Use of the net promoter measurement system with daily feedback from thousands of customers fed to the areas in Telstra responsible was a trigger for focus on customers. Other customer feedback measures and progressive culture assessments have supported Telstra’s customer-centric journey.

Telstra: Improving Customer Advocacy

Now it is paying dividends. The company has posted seven successive half years of earnings growth to AUD$2.1 billion for this latest half – up 21% on last year. Dividends have been steady, but are now set to increase. Telstra is on a roll with its customer-centric strategy and stronger customer culture proving Thodey’s stance. Stock price is at an all-time high at around AUD$6.50 per share with steady and continuing growth up from around AUD$4.50 two years ago.

Telstra posts 22pc net profit rise

David Thodey is the first to say that Telstra still has some way to go. But his leadership of a strategy and culture in which the customer is at the center of decisions and service delivery is creating a highly sustainable profitable business.

If you want to see how it all began you will find it was originally initiated first in the Finance Group at Telstra and described in a case study about the CFO’s value service culture initiative. See Case Study Highlight: Telstra Transformation.

Telstra’s transformation story can also be found in “The Customer Culture Imperative: A Leader’s Guide to Driving Superior Performance”

How customer centric companies make service recovery a priority

In the below video, Chris Zane of Zane’s cycles, probably the most customer centric bike store on the planet, tells the story of how they got things wrong.

Not only did they gets things wrong but on Valentine’s Day of all days!

We all get things wrong from time to time, what matters is how we handle things when we make a mistake. People that work for customer centric companies take ownership, take charge and make things right for the customer.

Is this how your team operates?

Customer Centric Leadership Practices – Lessons from “the HP way”

the hp way

Source: GIZMODO

In recent weeks I have met several ex-HP employees who told me about the great times they had at HP when the culture embedded by Bill Hewlett and Dave Packard prevailed – a culture of innovation, customer focus and respect for individuals as flesh and blood people.

One told me of his early days as an engineer working in one of the R&D labs in the Test and Measurement Division at Palo Alto. While working on a project at his bench he was expected to watch his colleague working on the next bench and through observation and discussion to see what he was struggling with – then to see if he could solve the problem. If he could, there just might be a lot of other engineers in the marketplace who are struggling with the same problem – and this solution might create a new market.

This practice, or cultural discipline, heightened the awareness of engineers at HP to be looking for problems that their engineering colleagues had that created a sensitivity to the potential needs of their “engineer’ customers. In effect, it made the R&D employees at HP customer focused.

Imagine if accountants in CPA firms or in financial services firms adopted the “next bench” theory. Or IT technologists in IT service firms practiced it. Or HR professionals in large corporations did it. We might just see stronger customer focused cultures emerging organically.

What are the opportunities for “next bench” thinking and practice in your business?

Customer Centric Lessons from the Rock Band Van Halen

CREDIT: PHOTOSTATION IMAGES/LARRY MARANO

CREDIT: PHOTOSTATION IMAGES/LARRY MARANO

Van Halen was particularly big in the US during the 1970s and 1980s. David Lee Roth was their lead singer and also somewhat of an technical operations expert.

In fact Van Halen was a pioneer in many ways for touring rock bands. They were one of the first to take a really big action-packed rock concert to smaller cities and towns across America. In one year they did more than 100 concerts across the US. The technical set-up for these concerts was on a massive scale, Van Halen would haul 9 semi trailers worth of equipment to each venue.

Although they had their own road crew much of the initial set-up had to be contracted out beforehand. As part of that process they had developed very detailed specifications to denote the way the stage and surroundings needed to be set-up. David Lee Roth actually described the document as the size of the Yellow Pages. It’s is not the sort of detailed work you would expect from a lead vocalist in a rock band, particularly one that had its fair share of Rock Diva bad behaviour.

In fact they not only threw a TV out the window from the suite of one of their hotel rooms but they had enough extension cable to ensure the TV stayed on all the way until it hit the ground!

Another bit of folk lore from the time was the band’s requirement to have a bowl of M&Ms with the brown M&Ms removed. In fact in the contract they had with venue suppliers it stipulated if this bowl of M&Ms was not available back stage they had the right to cancel the show with full compensation. Many people explained this away as Van Halen making ABSURD demands just because they could. However the truth of the matter is a little different. The clause, called Article 126 was written with a very specific purpose.

If the band arrived at a venue and David Lee Roth saw a Brown M&M in the M&Ms bowl he would demand a full check of the entire production. He believed it was a guarantee there were errors in the way the technical elements of the stage production were set-up as clearly they had not read the “yellow pages sized” instruction book!

David needed a way to check that people were paying attention to the details of his requirements as a customer. So he add this little test as a cue.

In fact as customers we all use cues to determine whether something is good or bad, high quality or low quality and what we might expect in terms of service.

In the airline business, the airlines know that if there are stains on the trays people feel nervous about the quality and safety of the aircraft. So the good airlines pay attention to these details because of the broader message it sends about safety and airline quality.

Do you have customers like this? What cues are your customers using to assess whether you will live up to your promises?

Do you have the type of organizational culture where people are tuned into these customer cues?

Is the Bell Canada Transformation Enough for a Competitive Future?

transformational_customer_centric_cultureLike most telecommunications companies in North America, Bell Canada has undergone a major transformation over the last four years since 2008.

In a 2009 article titled “How Bell Canada remade itself from the top down’, Ed Gubbins explained how the company changed its culture, operations and cost structure. George Cope, appointed President and CEO in 2008, led this transformation.

Along with reducing its headcount, reducing management layers, overhauling its field operations reducing its broadband repair response time from 8 days to 1, eliminating some brands, it implemented a “pay-for-performance” pay structure. A number of services were introduced to provide better and quicker service for customers. During 2011 and 2012 Bell made joint investments with Telus in wireless networks. It also attempted to acquire media company, Astra Media, but was thwarted by the CRTC regulatory body.

In 2013 Cope is continuing to lead this transformation of Canada’s largest communications company into an efficient customer-focused competitor, based on a strategy of enhanced service capability, significant broadband network investments and a high-performance team culture.

But is enough being done to create an enduring customer-focused culture to ensure Bell Canada’s competitiveness and profitability in the future? Bell operates in a marketplace being disrupted by technology. Transforming a large incumbent communications company from a technical engineering focus to a customer-centered organization is difficult and takes time. Cutting costs and building networks is the easy part.

Building the business on a customer culture foundation will be the one thing that Bell Canada must do to ensure its competitive future.

The wrong way to fire your customers – Lessons from Wells Fargo

firing your customers

Not all customers are created equal and unfortunately from time to time as a business’s strategy changes or market conditions alter it is necessary to cull certain customers.

Now this may sound strange coming from a customer centricity advocate but this is the reality of running a successful business. After all with out profits there is no business.

However there is a customer centric way to fire your customers and it does not mean kicking them on their way out the door! Every customer is valuable to a business and that includes past customers.

Customer centric businesses treat all customers with respect and when it is time to part ways with a customer, the company is still looking at ways it can do that in a value adding way. What does that mean? It may mean making recommendations to customers on alternative companies that can help them solve their problems.

A professional colleague of mine who runs a small international consulting business recently told me the story of how he received the message his business was no longer wanted by his bank, Wells Fargo.

He had been doing business with Wells Fargo International (an internationally focused unit within the bank) for more than 10 years when the following message arrived randomly in his in box:

wellsfargo customer firing letter

An interesting way to part ways no doubt! Now I don’t know all the details behind the decision to stop doing business with these customers or this specific consulting firm’s financial arrangements with the bank but it appears like a missed opportunity.

To throw away a 10 year business relationship because of an internal decision about the profitability of a certain part of the bank? Surely customers that received this message would be welcomed by other parts of the Wells Fargo?

What do you think?

12 Lessons from a CFO that created a Customer Culture in the finance function

Culture Transformation

In my last blog post I described the customer transformation experience of the Finance & Administration support function in Telstra, a $25 billion Australian telecommunications company. Their CFO developed and implemented a vision of a “value service culture” (known as VSC) in which leaders and individuals viewed their stakeholders as customers and found ways of increasing the value (actual and perceived) they delivered to them. This transformation created a $15 million bottom line impact

In this post I summarize their 12 key learnings from this transformation.

  1. The senior leaders’ passion, ‘walking the talk’, ongoing monitoring and follow-through is critical to success
  2. Initially there is need for a Customer Engagement Council that guides the culture change. It works best if it is relatively small (5-8 members), has a mix of senior leaders and opinion leaders and focuses on overall planning and key initiatives. As embedding of new behaviors occur and support systems are implemented there is less need for such a group as responsibility is spread throughout the organization.
  3. Linking a culture change to a long term corporate or business strategy creates relevance and reduces perception that it is a fad.
  4. A set of guiding principles that reflect an emphasis on corporate values such as empathy and transparency is important in changing mindsets to embrace customer needs. It is necessary to continually emphasize these principles with practical examples to create the new cultural norms.
  5. Creating an emotional connection to the culture change and acceptance of a logical reason for urgency to change takes time in a large group. Creating a sense of fun, competition and reporting of “wins” in the short term can accelerate the diffusion.
  6. For Corporate Support groups that have limited experience in thinking about what they deliver from the customer’s perspective and lack a mindset related to delivering perceived value, the launch phase should provide concrete guidelines at the outset. A comprehensive communication strategy that continually provides examples of the new desired activities usually needs dedicated resources and focus to provide clarity.leading_culture_transformation
  7. Collaborating across lines of business can speed the desired cultural change across an organization. In disparate functions it takes time to find common ground for sharing. An initiative like VSC creates the common ground. Cross-fertilization of best practices makes the cultural change more exciting and effective and demonstrates to new staff the relevance and scope of the customer responsive culture. It also promotes collaboration and innovation.
  8. A clear framework and measurement toolsare vital to guide improvements and reinforce desired behaviors. These include:
    1. Customer culture measurement as a starting benchmark, then for tracking culture improvements
    2. Customer satisfaction metrics that point to areas that need improvement
    3. Customer focus behavior norms incorporated in manager and staff reviews and their key performance indicators.
  9. Technical people who have little experience in treating colleagues as customers will require a set of new tangible skills as well as an emotional connection that sees personal value in doing things differently. The emotional connection is essential for people to take “ownership” of the customer’s problem and follow through with a solution.
  10. Well structured workshops are valuable to alter mindsets and provide skills. These should be implemented as early as possible to provide immediate ‘how to’ concreteness to the desired change in behavior. Workshop attendees who represented all lines of business and all levels were generally inspired by the VSC initiative. Train-the-trainer follow-on enabled them to reinforce their skills, train others and leverage the benefits for the wider group. Also, management workshops to evaluate their own VSC behaviors as role models were useful in presenting a common picture of VSC across the entire group.
  11. People at all levels need to understand that behavior change is difficult. It takes more time than expected to embed new behaviors in an organization, particularly those that require new skills as well as a new mindset. A strong ‘command and control’ hierarchy is present in many corporate support functions because of compliance requirements. It takes substantial and continued effort to break the “police” mindset to enable people to take customer initiatives freely and without fear. Initiatives emanatingfrom the lower levels in the organization need to be encouraged, nurtured and reported.
  12. Culture change can be effected more rapidly in smaller groups, particularly roles that are consultative and rely less on systems that may be unaligned to customer needs. This means that in large groups, the new culture mindset, skills and processes must be effectively taken into all of the small sub-groups as quickly as possible to have the greatest chance of making them stick.

A culture change that produces a customer responsive organization makes culture one of the most valuable assets of a business. It is a organizational capability that can and should be measured and the profit impacts assessed. The end result of this VSC transformation was annualized savings and benefits of $15 million after an 18-month period. These benefits increased as the customer culture became more embedded.

Interested to find out more about how to measure and manage a customer culture? Visit our resources page here.