Category Archives: Customer Value

How to be insanely service centric – Lessons from Zappos

Posted on November 13, 2012 by | Leave a comment

Customer Culture Car from Zappos

Zappos is renowned globally as a legend in customer service, partially for the e-retailer’s unique approach to customer interaction management. Zappos invests in the call center not as a cost, but as a marketing opportunity

Recently, Software Advice  Analyst Ashley Furness sat down with the company’s Customer Loyalty Operations Manager Derek Carder. He said the company’s whole strategy is to create loyalty through incentivizing ‘wow’ moments and emotional connections. Here are the four KPIs they use to monitor, track and improve performance:

  • Measure Total Call Time, Not Time Per Call

Instead of valuing quick time to resolution or processing high call volumes, Zappos looks at the percentage of a time an agent spends on the phone. Agents are expected to spend at least 80% of their time in customer-facing communications. This measure – called personal service level – is a way to empower the team to utilize their time how they see best promotes customer loyalty.

Reps who achieve this target get receive rewards, while those who fall below the 80 percent line are coached.

  • Quantify and Reward Wow Moments

Zappos measures calls against a 100-point scale called the “Happiness Experience Form.” This is based on answers to the following questions:

  1. Did the agent try twice to make a personal emotional connection (PEC)?
  2. Did they keep the rapport going after the customer responded to their attempt?
  3. Did they address unstated needs?
  4. Did they provide a “wow experience?”

Agents are expected to achieve a 50-point average or higher. Again, agents earn incentives for meeting their goals, while under performers are required to take extra training.

  • Mine for Idle Chats

Zappos monitors “abandonment time,” or periods when an agent has a session open even though the customer already disconnected from the chat.  Carder said sometimes agents do this purposely to avoid responding.

This strategy of looking for idle chats zeroes in on the cause of unproductivity. When agents aren’t productive, customers wait longer. And the longer they wait, the more apt they are to abandon the session.

  • Reward Perfect Attendance and Punctuality

Zappos uses a program called Panda to combat absenteeism. Employees receive a point for every day they miss work or come in late. Staff with zero points in a given period receive a varying number of paid hours off. These hours can be accrued and stacked for an entire paid day off, Carder explains.

The primary take away is that Zappos created metrics that emphasize creating a relationship with the customer rather than rushing them through the call. At the same time, these KPIs still successfully improve performance and make employees feel appreciated and rewarded.

This is what call center metrics look like when they are designed to maximize value for customers, rather than minimize costs for the company…..

Thanks to Ashley Furness for providing great inputs for the content of this post, for more on this story visit her here

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Posted in Customer Centric Culture, Customer Centric Values, Customer Experience, customer focus, Customer Insight, Customer Metrics, Customer Satisfaction, Customer Service, Customer Value, Customer-Centricity, Empathy, Employee Engagement, Freedom, Market Culture in Action, Trust, Voice of the Customer

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How you can create killer customer insights

Posted on November 8, 2012 by | Leave a comment

Customer Insights

Customer insight comes from a deep understanding of customers’ needs and drivers of customer behavior at a level well beyond what customers themselves can explain. These needs are understood from what customers tell us, but more deeply from what we observe customers doing and the frustrations they have in using particular products, services and companies.

Richard Branson, when trying to identify industries to enter a new Virgin service, asks the brainstorming question – “What are 10 things that nobody would say about this industry?” He and his team then prioritize those ideas that would create value for customers and profits for virgin. The next step is decide if a Virgin service can be designed to deliver some of these unspoken values in that industry. It is a great example of outside in thinking, starting with the customer’s pain points or needs and working backwards.

At Mercedes-Benz, rather than asking customers “What do you think of Mercedes-Benz?” a standard question that gets the standard answers about high quality, luxury and so on, they reverse the question –

“What do you think Mercedes-Benz thinks of you?”

This unique twist on a common question results in much deeper insights. Many customers responded initially by saying thing like “ you think we are made of money … that we have all the time in the world”. These responses  led the company to find ways of making its car servicing much more convenient for customers and to build in servicing costs to the initial purchase or lease arrangement.

In both cases these are questions designed to get customer insight that goes beyond what customers will normally tell us.

Are you asking the right questions?

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Posted in Customer Centric Culture, Customer Experience, customer focus, Customer Insight, Customer Value, Customer-Centricity, innovation, Innovative Thought, Outside In

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

Posted on October 30, 2012 by | Leave a comment

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.

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Posted in C-Level Quotes on MarketCulture, Case Study, CFOs, Customer Centric Culture, Customer Centric Leadership, Customer Culture and Profit Link, Customer Value, Internal Customers

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How CFOs can use a customer culture to deliver $15m to the bottom line!

Posted on October 29, 2012 by | 1 comment

Internal Customer Culture

A lot of the discussion about building a more customer focused organization centers on the customer facing parts of a business. While there is no doubt major improvements can be driven by sales, marketing and customer service, the real turbo boost to organizational performance comes from support functions that creates a culture around their internal customers.

“If your not serving customers make sure you are serving someone that does”

 Corporate Support functions like Finance, IT and Operations have the potential for releasing huge gains to the business in terms of cost savings and profit improvement. How? By developing a culture where they see their internal stakeholders – that is those to whom they provide their services – as customers.

When they develop a “customer” mindset they think about the value (or lack of) they are providing. They stop delivering reports or services that have no value to their customers and focus on things that will increase value.

John Stanhope, CFO of Telstra, a $25 billion Australian telecommunications business set out to transform his Finance & Administration Group of 2500 people into a support group that would create new value, provide top service and be seen to be valuable by its customers. He painted a vision of what he called a “Value Service Culture” (known as VSC) in which he wanted all his staff to identify their internal (to Telstra) customers and deliver services of value to them. This journey from 2008 to 2012 was an outstanding success.

“We have delivered $15 million per annum in recurring gains from stopping non-value services and activities while creating more value in those services that were needed by our customers. This translates to an additional $55 million added to the value of our business.” – John Stanhope, CFO, Telstra Corporation, 2012.

An investigation by Telstra’s Finance & Administration group of estimated gains and savings conducted in 2010 showed annualized gains and cost savings of $15 million for 2009 representing added value to the business of $55 million.

These gains were derived from analysis of specific initiatives by:

a)    Credit Management acting to collaborate with Telstra customers to reduce bad debts, cost savings from less follow-up calls and longer customer retention periods.

b)   Risk Management & Assurance collaborating with internal customers through an education initiative clarifying compliance requirements and streamlined processes for reducing work for both parties. Cost savings from labor savings.

c)    Corporate Security and Investigations working with Telstra retail shops to provide better processes, follow-up and liaison with those shops most targeted by consumer fraud. Reduction of fraud yielded large cost savings.

d)   All finance and administration groups engaged in activities to reduce duplication and eliminate non value-add activities and reports resulting in measurable savings.

Care was taken to attribute only those gains and savings that could be aligned with VSC initiatives to do with understanding customer needs, providing greater value for customers, monitoring customer feedback and collaborating with customers to deliver the Group’s fiduciary responsibilities more efficiently. Later analysis showed these gains were continued over 2010 to 2012.

Stay tuned for my next blog post in which I will summarize the actions vital to Telstra’s VSC success and the lessons learned from this transformation experience.

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Posted in C-Level Quotes on MarketCulture, Case Study, CFOs, Client News, Customer Centric Culture, Customer Service, Customer Value, Customer-Centricity, Internal Customers, Marketing Finance

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Stop adding features start adding value!

Posted on October 22, 2012 by | 1 comment

marketculture_feature_creep

Those of us that have worked in the product management world know too well how easy it is to add features to a product without adding value. This is one of the key challenges in business – how do we improve the value we are offering customers without adding cost?

Unfortunately this question is often answered by adding more features to an already feature rich product. The outcome is usually a product that is more complex and often less valuable at a higher cost (thanks to the costs of adding the new features!)

What drives this behavior? Usually is one or more of the following factors:

  1. The pressure to constantly increase sales.
  2. The pressure to lead the competition
  3. Trying to be all things to all customers. (Listening to that one customer that wants a special feature)
  4. Making assumptions about what customers want without really testing their validity

How do you avoid making this mistake?

Ask yourself three questions:

1.  Does this new feature compliment the core purpose of the product?

In other words is it adding value to the problem being solved by the product. For example does it make sense to add a clock to a dishwasher? No! the product is not designed to tell the time, its job is to wash dishes.

2. Does adding this feature reduce the value of other features?

There are many examples of overly complicated solutions frustrating users. Logitech has built a whole business around simplifying remote TV controls which are notoriously difficult to use. It feels like 90% of the buttons on a TV remote are for features I would never use. This makes the whole device seem clumsy and over engineered.

3. If I add this new feature what can I take away?

Regularly review what can be removed from the product and still have it accomplish what the customer wants to achieve. Use the following criteria to prioritize which features must go:

  1. Features that are costly to support
  2. Features that detract from other value-adding features
  3. Features not used by customers

This same thinking applies to everything in marketing. Are adding value or destroying it?

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Posted in customer focus, Customer Insight, Customer Value, innovation, Innovative Thought

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How a customer culture frees employees

Posted on October 11, 2012 by | Leave a comment

Symbol of Freedom

There is a great quote in the book I am reading at the moment, The $100 Startup  by Chris Guillebeau that goes something like:

“The quest for freedom comes from pursuing value for others.”

The more value we can create for our customers the greater our financial and personal freedom to choose what we want to do in life.

How does building a “customer culture” relate to this idea?

When we work in an environment with certain norms of behavior and expectations we generally conform to these. It is a form of social pressure that drives group behavior. If you happen to be lucky enough to work in a company that promotes a customer focus you will be exposed to some awesome things.

You will see how the best business people in the world develop a deep understanding of their customers. You will be exposed to their ways of thinking, their processes and how they lead around this important idea. That exposure will help you to build your own customer focus skills.

As you develop your own skills you will increasingly be able to provide more value to your customers, colleagues and to the business you work in. You will spend your time creating real value rather than on activities poorly aligned with customer needs and result in wasted effort, resources and destroy motivation.

Freedom follows this success and employees are free to work on ever bigger and bolder challenges. So what company would you rather work in? One inspired by how to change the lives of customers for the better or a lesser alternative?

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Posted in Customer Centric Culture, Customer Centric Leadership, Customer Centric Values, customer focus, Customer Value, Customer-Centricity, Employee Engagement, Freedom

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Does customer focus matter in banking?

Posted on October 9, 2012 by | 1 comment
Customer Service in Banking Does it Pay?

Customer Focus in Banking Does it Pay?

A recent article in the New York Times highlighted one bank analyst’s view that “Spending time solving problems with people is not selling products…. Its wasting time”.

As a bank analyst his role is to review the bank’s financials and make buy, sell or hold recommendations to his clients. His statements came after having a poor customer experience at his local Wells Fargo. He lamented, “I’m struck by the fact that the service is so bad, and yet the company is so good.”

This particular analyst has a history of being controversial so what he says has to be taken with a grain a salt, however, does he have a point?

The analyst decided to change banks as a result of the poor experience. Did he expect other customers not to respond in the same way? By letting their feet do the talking?

This incident raises challenges relevant to all leaders trying to improve customer focus.

Would you use a single example of failure to conclude this is the way Wells Fargo does business? Common sense suggests the answer would be “no”.

Was this experience and an anomaly or symptom of greater problems? Was it a one off issue confined to one employee in a single branch or a sign of a broader cultural issue?

In Wells Fargo’s case the evidence suggests the former. Over the past few years the bank has a string of top place finishes in customer satisfaction independently measured by the American Customer Satisfaction Index.

Based on our research we know that companies with high levels of satisfaction are more profitable. The reason Wells Fargo is doing well is because of its customer focus not in spite of it as the analyst suggests.

Another question highlighted by this story is how important is “customer service” to the banking experience?

Customer service is part of a customer’s consideration set but it will vary in importance depending on the customer. Customers have different needs and will use the bank’s services in different ways. A customer looking for a mortgage will be more sensitive to the bank mortgage rate than one that only has a checking account. Some customers may never enter a bank branch. They conduct all their banking online. Customer service from them only becomes an issue when something goes wrong.

As a business leader what is more important to understand is how customer centric is the company’s culture. Am I setting sending the right messages to our team about the importance of customers? Am I role modeling the behavior that I know will make us successful in the customer’s eyes?

What do you think?

Is this a bank analyst just trying to be controversial to get publicity? Is it a one off or an early warning sign?

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Posted in Customer Centric Culture, Customer Culture and Profit Link, customer focus, Customer Satisfaction, Customer Service, Customer Value

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4 simple practices to build a customer culture in your company

Posted on October 4, 2012 by | Leave a comment

This is a great short video interview with Tony Hsieh of Zappos discussing how the concept of culture and customers come together. Also thanks to Robert Reiss, host of The CEO TV Show.

The intersection of customers and corporate culture

The culture of an organization dictates how it will view customers and how it will treat them.

If everyone is expected to understand who customers are and what they value, then people naturally start doing this. Culture is a form of social pressure, it is the way you are expected to behave in a group environment, hence it is a very powerful way for leaders to create an environment of success.

Customer culture specifically looks at how much attention is being placed on bring the customer viewpoint into all decision making. It is a proven way to drive better business results as it ensures the business is aligned with its market.

Here are some great customer culture building practices that you can begin today regardless of the role you play in your company:

1. Put Customers on the Agenda

A great habit that gets everyone thinking is to start every meeting with a customer insight. Share one piece of feedback you’ve collected, one idea you have heard directly from a customer. These insights and stories can come from anywhere in the company. It does not have to be a deep conversation – just a way to get in the habit of brining the customer viewpoint inside before getting on with the rest of the meeting’s agenda.

2. Building Customer Empathy

Have someone share their own recent customer experience. Was it a positive one? What made it positive? Why did it stand out in their mind? How does it affect the way they think about that company and would it influence whether that would continue doing business with them? What does it mean for your company?

This simple exercise is a great way to build customer empathy in the team. By thinking like a customer you can make changes that will drive increases in value.

Steve Jobs and his leadership team conducted a similar exercise and recognized how dissatisfied they all were with their mobile phones. In their experience, phone’s were difficult to navigate, complex and basically not user friendly. This created the drive and inspiration to develop the iPhone.

3. Encourage Leaders to Share Customer Stories

Create a regular opportunity for senior executives to report on what they learn from their own conversations and interactions with customers.

There maybe extra leg work to translate what they heard into a useable insight, but it will be well worth the effort.

4. A Top Successes/Frustrations Customer Conversations Report

Create an ongoing forum for people to share what customers are saying in the form of a communication piece to the whole company. It should be in story form but can include statistics on key customer metrics ie things that are important to customers that your company helps them achieve. For example LinkedIn tracks how many new connections it helped people create on its professional networking site each day.

It should also include the top frustrations customers have when doing business with you. This highlights to everyone the priorities in terms of maintaining and improving customer satisfaction levels.

We have lots of FREE tools, templates and elearning modules to help build your customer culture here

What other practices do you use to drive a great level of focus on customers?

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Posted in Branding, C-Level Quotes on MarketCulture, Competitor Insight, Customer Centric Culture, Customer Centric Leadership, Customer Experience, customer focus, Customer Insight, Customer Metrics, Customer Satisfaction, Customer Value, Customer-Centricity, leadership, Market Culture in Action

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7 Ways to Boost your Customer Focused Culture

Posted on October 2, 2012 by | 2 comments
Bringing the Customer Into Focus

Bringing the Customer Into Focus

Customer focused businesses outperform their competition on every metric that matters – profitability, sales growth, innovation and customer satisfaction.

Most business leaders agree that increasing customer focus will improve business performance so the question then becomes how?

Here are 7 ways leaders can help improve the level of customer focus across their businesses:

1. Get everyone involved. Every employee has an impact on customers, sure sales, marketing and customer service lead the daily interactions, but the non-customer facing staff can have a powerful impact. Sales and marketing teams make the promises to customers that the organization must deliver on. If everyone is not on the same page execution falls over and customers bare the brunt.

2. Benchmark your current level of customer focus. There is a lot of talk about customer focus but how do you make such an abstract concept real? We think part of the answer is to measure and benchmark it. We do that through the Market Responsiveness Index which measures the level of attention companies place on the markets and customers they serve. As Peter Drucker once said “If you can’t measure it, you can’t manage it.” – a customer focused culture is no different.

3. Make it real – Define what “customer focus” means in your business. Customer focus will mean different things in different businesses, it is important to get clear on what it is and what it means in terms of expected behaviors in your business. Many companies have this term in their vision or mission statements but it stays in the “ether” what do those mission and vision statements mean in terms of actually guiding operations?

One of our clients recently started to change the language they use when talking about customers. One of their businesses is an online dating service. Rather than only focusing on new subscriptions they are looking at other metrics for example How many dates have we created? This type of metric is more meaningful to both customers and employees, it focuses on one of the outcomes important to customers and recognizes the contributions employees are making to improving people’s lives.

4. Put customers on the agenda. This is a simple action leaders can implement today. Are customers discussed in every meeting? If not why not? What impact will decisions have on customers? Are we making decisions that create short term gains at the expense of customer relationships?

5. Hire people with a customer focused mindset. People make have the technical skills required for a job, but do they have the “customer focus” skills and/or mindset? In order words are they value creators that recognize their role is to serve customers or serve those that do.

6. Help employees connect their work with customers. In many large organizations employees can feel disconnected from customers. Leaders need to provide the tools and communication to help them connect their work with the bigger picture.

7. Recognize customer focused behavior. Individuals demonstrating the right customer focused behaviors need to be highlighted and recognized in a meaningful way. If employees believe they will be recognized they will be motivated to do things differently.

Customer focus is really about understanding the customer’s world and what your organization does to improve it. If your employees don’t understand the customer and what makes your company different you are missing a significant opportunity to improve performance.

How do you improve the customer focus in your company?

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Posted in Customer Centric Culture, Customer Centric Leadership, customer focus, Customer Value, Customer-Centricity, Market Culture in Action, Market Driven

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Is Apple heading for a fall?

Posted on September 26, 2012 by | Leave a comment

Apple Maps Virtual Reality?

One of my favorite authors Jim Collins in his book How the Mighty Fall describes a 5 stage model of decline that many companies pass through on their way out of business.

The first stage he describes is the “Hubris Born of Success”. Hubris is an ancient greek word that means extreme pride or arrogance.  It is an overarching estimate of one’s own importance that one is blind to the views of others or to potential dangers to one’s own position. In the great Greek tragedies hubris invariably precedes destruction.

Unfortunately we have seen an example of that from Apple with a decision to replace Google Maps with their own inferior mapping software. Now don’t get me wrong, I am a massive Apple fan, I write this blog on a Mac and have spent a small fortune on Apple products over the years. However if the decision to provide a product not ready for prime time wasn’t bad enough, Apple actually replaced one that was far better (Google Maps). This is a sure sign of Hubris. Here are a few recent apple maps user images:

apple maps highway image

apple maps puts burger king in the wrong place

Interesting new store design for Burger King!

Why would Apple make this decision?

Perhaps Apple believes it can do it better? Maybe it wants to own every core application on its iPhone platform? Certainly Google and Apple have become more like competitors than collaborators over the past few years. This is thanks to the Android cell phone operating system that competes with the iPhone.

What ever the reason, it’s a decision that does open the door for the competition. It’s also an example of the types of decisions that can lead them down the wrong path. Would Steve Jobs approve of the Apple Maps release?

Now Apple has always been a challenging company to partner with (I spent a number of years working with them in my days at HP). However when they deliver outstanding innovative products many things can be excused. What happens when they stop delivering? Unhappy customers and partners hungry for alternatives will rapidly look elsewhere.

Apple is the world’s most valuable company at almost $700bn in market capitalization, its iPhone business alone is worth more than Microsoft’s total business. It changed the smartphone market forever. But Hubris is a dangerous affliction. Will this be Apple’s fatal flaw?

What do you think, is this just a blip on the radar or a signal of something more serious?

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Posted in Competitor Insight, Customer Centric Leadership, Customer Value, innovation, market culture, Market Culture Inaction

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