Category Archives: Customer Culture and Profit Link

What is the kryptonite for disruptors?

Established businesses everywhere are under attack. The headlines are full of stories of business disruption. Entrepreneurs everywhere are building companies to unseat the entrenched firms.

While many think the answer is to invest in more technology, lobby government or follow their competitors actually the answer is right in front of them.

Our team in Sydney recently had the chance to sit down with Luke Jecks, the Global CEO of Naked Wines for his perspective. Listen to Luke talk about what he describes as the Kryptonite for disruptors, its a great lesson for anyone in business today:

So what’s the Kryptonite for disruptors? A Customer Culture or as Luke puts it:

“Love your customers”

If you spend time understanding and acting on your customers needs you will create loyalty that will keep you as immune as you can be to disruption.

So how did Naked Wines disrupt the wine industry?

Before Luke setup Naked Wines four years ago he was looking for an industry where customers felt disenfranchised. He found it in the Australian wine industry – a market dominated by two large retail chains owned by Coles and Woolworths that between them shared almost 70% of wine sales nationally. Not only did he find wine lovers who felt little connection with the vast array of brands but also boutique vineyards that were being squeezed out of the market by ever narrowing margins and an inability to finance the next vintage.

Luke knew that if he could create a personal connection between wine growers and consumers and a financial model that could provide more stability and certainty for wine growers he could build a new business.

He realized that he needed wine consumers as repeat customers and he came up with the idea of “angels’ – that is consumers as angel investors who would pay $40 per month and build up a credit in their account to be used to buy the boutique wines of their choice.

Four years after launch Naked Wines in Australia has more than 50,000 sustained angels, more than 35 boutique winery suppliers with an online communication and ordering system that connects them.

Annual Australian revenue of $30 million and more than $200 million globally is testament to the fact that the whole Naked Wines team have a culture that enables them to “love” their customers.

Isn’t it time to create a customerculture in your business and build up your disruptor defenses?

If you are interested in creating this type of culture in your organization why not attend one of our MRI Accreditation Workshops held all around the world!

 

Amazon’s customer centric moment of truth

jeff_bezos_amazon Image credit: Steve Jurvetson/Flickr

I have been a fan of Amazon.com for many years, in fact I wrote extensively about them in my new book, the Customer Culture Imperative.

However some recent news about some of their practices have caused me to pause and question whether they remain true to their stated vision as being “the most customer centric company in the world”.

As recently reported in PC World, the FTC filed a complaint against them for billing parents millions of dollars’ worth of unauthorized in-app purchases made by their children.

To me this raises some alarm bells, targeting kids in this way is problematic. Kids are clearly less sophisticated and financially literate consumers, vulnerable to impulse purchases.

Also it sounds as though employees at Amazon had their own concerns, this quote was cited in the PC World article:

“One internal Amazon communication said that allowing unlimited in-app charges without any password was “clearly causing problems for a large percentage of our customers”

As a customer centric business, you have the interests of your customers as a first priority. This approach builds trust and long term relationships, the outcome for business is sustainable ongoing profits.

Is making it easy for kids to spend hundreds of dollars on in app purchases reflective of a company with its customer’s best interest at heart?

Jeff Bezos is a well known long term thinker, however this sounds like some short term profit thinking to me.

What do you think?

Diagnose Your Customer Culture

I hope you enjoy our post from the Harvard Business Review Blog Network

Driving high value – low cost customer experiences

emerging_customer_centric_airline_indigo

A friend of mine travelled last week from Bangalore to Dubai on IndiGo Airlines. She said it was low cost, with seats that would lean back giving a feeling of more space, along with great customer service. She travelled coach class and yet was addressed by name by the flight attendant.

IndiGo placed its first order of 100 aircraft with Airbus to start its business as a domestic airline in India. The size of this order ensured low operating costs, full maintenance support from airbus and the latest aircraft technology and comfort. In 2005, when other low-cost carriers were working with older, leased aircraft and battling a reputation for inferior service, Indigo inked a deal to buy 100 new A-320 jets from Airbus, purchasing at volume to ensure a lower price and a partnership-type commitment on maintenance. IndiGo’s investment in the training of its staff and its [aircraft] fleet killed whatever difference might have existed between a low-cost carrier and a full-service carrier by offering equivalent service. By 2011 Indigo had neatly 20% of the rapidly growing Indian domestic market. In September 2011 it introduced its first international flight to Dubai.

Indigo turned regular business travelers into loyal customers because it never acted like a budget airline. From the beginning, its purchase of all new aircraft helped it avoid maintenance problems, and superior planning helped it to match or exceed the on-time performance record of its full-service competitors — even though rapid turnaround of its planes was the key to the company making money.

But it also went beyond the basics to reinvent the first-time flyer segment. When Air Deccan, acquired by Kingfisher in December 2007, was struggling to fight the impression that their planes operated like public buses with wings, IndiGo pushed best practices even when there was no compelling reason to do so. In a country where other carriers shared passenger-stair vehicles and the top airline still had to have disabled passengers carried up the staircase to plane height by ground crew, for instance, Indigo brought in larger, handicapped accessible passenger ramps from day one.

Similarly, the company equipped check-in staff with hand-held scanners that allowed passengers without baggage to avoid the dreaded scrum at the counter. And at least in the beginning, flight attendants manning the beverage carts addressed even lowly economy class passengers by name (with the aid of the seating chart).

The strategy paid off: Since 2008, when the company booked its first profit even as high fuel prices and the economic downturn ravaged its competitors, IndiGo’s net income has grown more than five times — from a shade under $20 million to more than $120 million.

With Boeing forecasting that Indian air traffic will grow 15 percent a year over the next five years and that India will require more than 1,000 commercial jets over the next 20, according to the Wall Street Journal, that may just well make IndiGo the fastest growing airline in the world’s fastest growing aviation market.

IndiGo President Aditya Ghosh says India is a hugely under-penetrated market. We have just one commercial aircraft for 1.9 million people. The United States has one plane for every 50,000 people.”

The airline, which earlier ran role specific training programmes like any other airline, decided to merge training into one central operation with three segments: one, functional skills training aimed at specific roles like that of pilots, in-flight crew, ticketing attendants, baggage handling, among others.

The next segment was coaching for customer service and soft skills.

The last came leadership training at all levels.

This last segment of training, designed to encourage all employees to take ownership of customer issues, Ghosh insists, has really helped the airline develop a strong loyal customer base.

Do you have the right skills sets in your organization to drive high value at low cost?

Breaking down company silos with internal social media tools

cross-functional collaboration

In a recent project with a large Energy company, I was working with the senior management and staff to help develop and embed a customer-centric culture. It is their belief and mine (based on extensive research) that a customer-focused business will drive ongoing prosperity. In our research, along with that of many others, we have found that an important factor in enabling a customer culture to become embedded is internal cross-functional collaboration. We found senior and middle management in the Energy company were stymied in their attempts to focus on customers by emails and informational meetings that dominated their work day. Functions were working in silos with very little cross-function collaboration referencing customers and how to increase customer value.

This is typical of so many large organizations.

Don Tapscott, the author of several books on the impact of digitization on our work world, discusses new forms of collaboration in his newest book, Radical Openness: Four Principles for Unthinkable Success.

In an interview in September 2012, recorded in the McKinsey Quarterly, Tapscott described the new social media tools for collaboration:

“How do we get beyond e-mail to these new social platforms that include an industrial-strength social network? Not through Facebook, because that’s not the right tool. But there are tools now: wikis, blogs, microblogging, ideation tools, jams, next-generation project management, what I call collaborative decision management. These are social tools for decision making. These are the new operating systems for the 21st-century enterprise in the sense that these are the platforms upon which talent—you can think of talent as the app—works, and performs, and creates capability.

We had this view that knowledge is a finite asset, it’s inside the boundaries of companies, and you manage it by containerizing it. And this was, of course, illusory, because knowledge is an infinite resource. The most important knowledge is not inside the boundaries of a company. You don’t achieve it through containerization, you achieve it through collaboration.

So, there’s a big change that’s underway right now in rethinking knowledge management. It’s really moving toward what I would call content collaboration, as opposed to trying to stick knowledge into a box where we can access it. E-mail is sort of like what Mark Twain said about the weather. Everybody’s talking about it, and nobody’s doing anything about it. We have to get rid of e-mail.

You need to have a new collaborative suite where, rather than receiving 50 e-mails about a project, you go there and you see what’s new. All the documents that are pertinent to that project are available. You can create a new subgroup to talk about something. You can have a challenge or an ideation or a digital brainstorm to advance the interests of that project. You can co-create a document on a wiki. You can micro-blog the results of this to other people in the corporation who need to be alerted.”

This thinking and these tools apply directly to sharing knowledge about customers and competitors. Effective use of the tools can have a substantial impact on innovation, competitiveness and customer value if they are directed towards sharing across the business a deep understanding of customers, competitors and the changing market environment. This will strengthen an organization’s customer culture which in turn will drive future growth and profitability.

How would you rate your level of cross-functional collaboration? To what degree are you using the new social media tools for internal collaboration? Why not benchmark your level of collaboration and take action to strengthen it?

Does Intel have the right culture for the future?

intel's_customer_culture

In a question asking him to summarize the Intel culture, outgoing CEO (in May  2013), Paul Otellini said:

“Egalitarian. Merit based. That came from Noyce. Anyone can speak in a meeting, but you must speak with data. That came from Moore. Take risks. Embrace innovation, but do it with discipline. That’s Grove. World-class manufacturing came from Barrett. I’ve added a marketing component.

The other thing unique to Intel, at least in Silicon Valley, is the mix of older and newer employees. Intel has more 20-year-plus veterans than any Silicon Valley company. I’ve been here 36 years. Yet the average age of our global workforce is 25. Tradition and innovation. We like both.”

Intel’s culture seems to do everything to drive facts and reasons ahead of position and formal authority. One of Intel’s values is something like “constructive confrontation”.

Among large technology companies, only Intel has mastered CEO succession multiple times. Founded in 1968, Intel has gone from founders Bob Noyce and Gordon Moore, who both served as CEOs, to Andy Grove, Craig Barrett and now Paul Otellini without losing its status as the world’s preeminent chip manufacturer. It has had some major tests of its culture.

In the mid-1980s Intel’s memory chip cash cow was being wiped out by Asian competitors and its future star, the microprocessor, was still building. Intel faced scandal in 1994 when it mishandled news about flaws in its Pentium chip. In 2006, the newest CEO, Otellini, had to lay off 10% of workers in what now can be seen as a prelude to the Great Recession.

In 2006, when Ortellini took the helm, he tossed out the old business model. Instead of remaining focused on PCs, he pushed Intel to play a key technological role in new  fields, including consumer electronics, wireless communications, and health care. And rather than just microprocessors, he wanted Intel to create all kinds of chips, as well as software, and then meld them together into what he called “platforms.” He went about reinventing Intel as PC growth began to slow.

In addition top to bottom reorganization, he made big changes in the way products are developed. While previously engineers worked on ever-faster chips and then let marketers try to sell them, there are now teams of people with a cross-section of skills. Chip engineers, software developers, marketers, and market specialists all work together to come up with compelling products. Otellini is convinced such collaboration leads to breakthrough innovations.

Otellini has strengthened Intel’s financial performance and maintained dominance of its industry. The challenge facing the new CEO will be to keep pace with the changing mobile, tablet and social media environment. Intel’s culture took a battering with the major staff cuts in 2006 and again substantial cuts in 2011.

Will it be resilient and adaptive enough with a new CEO to strengthen the future focused, customer oriented culture that was a focus of Otellini’s reign? Has it retained its innovative capabilities? Only time will tell.

Why are companies grappling with basic customer service?

employee fear of change

Adam Bender from Computerworld Australia recently reported on an event hosted by IPscape exploring the challenges companies continue to have delivering customer service that meets expectations.

With exploding connectivity and consumer expectations for instant service one would think businesses would be forced to respond.  However fear and other factors have made progress slow.

“the vast majority of organizations are still grappling with the absolute basics” of customer service, including how to minimize how much time customers spend on hold or being routed through automated telephone systems.

IPscape CEO Simon Burke

“Fear of change” has held back many companies from enhancing customer service, Burke said. Even if a call center agent recognizes improvements, the agent may not tell upper management because of a perceived unwillingness to change, he said.

Telstra, the large Australian telco sees “a distinct shift away from thinking about technology as a way to cheapen the customer contact,” but rather as a way “to deepen the customer contact,” said Telstra group general manager of industry development, Rocky Scopelliti. He said there’s a diminishing distinction among the many channels customers use to contact businesses. “Organisations have arranged their channels as though there are different customers who are using different channels,” he said. “But it’s one customer [who is] engaging in different ways.” Customers expect companies to know the “context” of their engagement so they don’t have to “explain themselves at every step of the process,” he said.

What’s the real problem here? It’s cultural! First, there seems to be fear at lower levels of large organizations that upper management does not want to change its customer service practices. Why? Because, it is believed that the whole focus is on reducing the costs of customer service. Second, there does not appear to be a deep understanding of customer buying behavior and preferences.

This will continue until upper management address the need for a strong customer culture – a belief at all levels (led and demonstrated by senior executives) that what’s best for the customer is best for the business. This belief must then be translated into customer focused practices at all levels that create a deep understanding of customer perceived value and delivery of relevant service for customers.

When will this occur? When executives measure their organization’s level of customer-centricity and discover the direct links of a much stronger customer culture with outstanding business performance.

Do you measure your business’s level of customer-centricity? If you don’t, how can you expect to manage it for superior business results?