Category Archives: Internal Customers

4 reasons internal competition helps companies win with customers

competition-matters

People view competition in many different ways. In the business world it is often viewed negatively as it can impact profit margins and companies must compete for a share of the pie. From a customer’s perspective competition drives better service, better prices and better value.

Personally I am a big fan of competition, it pushes me to the next level, it forces me to get better. Inside organizations competition can also prove to be a positive force but no all competition is healthy and productive.

Unhealthy competition develops when the following happens:

1. When it causes people to feel negatively about other peoples’ successes as opposed to motivated.

2. When people wish for others to have obstacles so that they are held back.

3. When people feel shame when they fail.

4. When it motivates people to seek competitors who are naturally weaker than themselves, so that they feel an advantage.

Healthy competition can be a great productivity booster in organizations and drive better results. Here are some of the benefits:

1. It encourages people involved to strive further and push themselves harder than they would have without competition.

2. It drives people to achieve more growth and success – not because they are driven to win or lose – but because they are doing your best at something that you care about.

3. It changes the boundaries of what you believe you are capable of and stretches the limits of what you believe is possible.

4. It requires the courage to take risks, requires the willingness to fail, and necessitates a vulnerability to admit you are ambitious to succeed.

The worlds best organizations balance healthy competition with cross company collaboration

What type of competition do you see in operation where you work? Do different functions compete in a healthy way? Do they collaborate?

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.

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

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.

3 necessary ingredients for building a customer focused culture in your team

Internal Customer Focus

Customer focus is not just about customer service or only about the frontline of an organization.

Every individual needs to translate what customer focus means to them in their role

Here are the 3 ingredients necessary to get started:

1. Identify your customers, who are the people inside or outside the business you are creating value for?

Every role has a customer, you may not think of your colleagues or internal departments as customers but this is a good way to get into the customer mindset. Just imagine for a moment  that your colleagues were paying you for your services directly, how would that change your behavior?

2. Review your work streams, what do you do for them?

What services do you provide? Which of those create the most value? Do your customers recognize the value of those services?

3. Get feedback and refine your work, do they value what you do? How can you improve the value of your work?

For example does the sales department value the lead generation process developed by the marketing team? If not why not? What can be done to improve it? How about the reporting provided by finance? Is it meeting the needs of marketing and so on. The internal processes and interactions between departments matter.

For a company to be truly customer focused it must start on the inside.

We have a simple free tool to help you map this called the Personal Customer Value Map.

It will only take 15 minutes but it will give you some new insights into how you work with customers and ideas on how to improve.

Energizing your employees with internal marketing – Part 2

This is part 2 of an interview with Sybil F. Stershic, an expert on internal marketing. (Click here for Part 1)

3. As marketers, how can we incorporate internal marketing tools into the way we do our jobs?

I advocate two types of internal marketing tools. The first type involves what I call the “Employee-Customer Link” – find ways to connect employees with customers. For example, I encourage sharing general customer information, along with the results of any customer satisfaction research and complaint tracking, with ALL employees. Employees need to know who your company’s customers are … why they do business with you … how they use your products & services … and what they think of you. Too often customer information and insight is kept within the marketing, research, and/or sales functions. But the more your employees know about your customers, the better they can serve them. Another way to forge the employee-customer link is to include employees in customer visits or customer events, where appropriate. Some companies even set up “adopt-a-customer”- programs where employees reach out to customers to better understand their needs. These programs enable employees to connect with customers as real people, not just faceless names and account numbers.

The second set of internal marketing tools relates to strengthening a company’s “Internal Service Culture” based on the reality that internal customer service drives external service. These tools are used to encourage and reinforce collaboration, support, and communication across the organization so that employees work effectively with each other to achieve marketing and organizational goals. For example, one company organized a job-shadowing initiative where employees took turns spending time with other employees in different departments outside their respective functions. This effort enabled employees to better understand how their work – individually and collectively – impacts customers and the bottom line; i.e., it reinforced the message “We’re all in this together.” Marketers can be role models for internal collaboration by being inclusive in the planning and implementation of brand and marketing strategy – communicating with, educating, and providing the training and reinforcement that all employees need to understand and effectively deliver the brand promise.

4. What are some of the inhibitors to internal marketing and how can they be overcome?

I’ll comment here on what I consider to be a major inhibitor: the lack of top management commitment and involvement. Consider the popularity of “Undercover Boss” – people are hungry for a real connection between top management and employees.

In such situations, I tell people they need not wait for management to get a clue. If you don’t have the authority to implement internal marketing at the macro level (i.e., across the organization), you can still have an impact at a micro level – you can apply internal marketing on a department, division, or business-unit level. I encourage people to involve other departments at the outset, but if you’re unable to enlist human resources, administration, operations, etc., in internal marketing, you can go it alone. Sometimes all it takes is for one department to start; then when others notice the difference (“Hey, the folks there actually seem to enjoy their work!”), internal marketing can spread throughout the organization.

5. What is the best place for companies to start an internal marketing program?

Start by talking with and listening to your employees. Ask them what gets in the way of their doing their jobs effectively; then brainstorm what can be done to overcome those barriers. You can also ask them to put themselves in the CEO’s shoes and identify one or two things they would do to improve the organization. Another great conversation starter is this question: Would you refer a friend to work here?

In addition, review the results of your current customer satisfaction measurement. What are your customers telling you in their responses to how well the company is taking care of them? If you don’t have such customer and employee research, then invest in it.

Internal marketing involves listening and responding to both employee and customer concerns. Keep in mind that the way your employees feel is the way your customers will feel – and if your employees don’t feel valued, neither will your customers!

For more on internal marketing get hold of Sybil’s book , Taking Care of the People Who Matter Most: A Guide to Employee-Customer Care and visit her blog: Quality Service Marketing Blog

Energizing your employees with internal marketing – Part 1

Sometimes we forget how great customer experiences are created. They are the result of employees that really care passionately about making a difference and delivering maximum value for customers.

In our work we often see companies that have corporate cultures that unfortunately work against this innate goal. Most people want to do the right thing for customers but sometimes their environment makes it harder than it should be. This is where internal marketing can play a role.

The following are the first two questions from an interview with an expert on this subject and a fellow AMA instructor, Sybil F. Stershic.

1. Can you tell me more about what internal marketing entails? How do you define it?

It’s marketing inside an organization to engage employees in delivering a positive customer experience – take care of employees so they can take care of customers, including co-workers who are “internal” customers.

Internal marketing is a strategic blend of marketing, human resources, and management to ensure organizations provide the resources and reinforcement employees need to take care of customers. But don’t be misled by the “marketing” label, since any manager can apply it.

2. What are the trends driving the increased interest by companies in internal marketing?

There are several:

  • With increased commoditization and a cluttered, crowded marketplace, smart companies realize their core differentiation comes from their employees. Think about it – any innovative product or service introduced by Company A today can be easily copied by Company B tomorrow. But the one thing Company B and other competitors cannot duplicate is the relationship Company A has with its customers.
  • Another reason for interest in internal marketing is the intense focus on employee engagement, especially considering how the economic downturn over the past few years has contributed to higher levels of disengagement. Employees are tired of being told to “do more with less” and many are just biding their time until the economy improves and they can change companies. I’ve seen research indicate that only 21% of workers are fully engaged in their jobs (if only one out of five are fully engaged, then what are the other four employees doing?). And more than one-third of employees admitted they’re partly-to-fully disengaged. Gallup estimates the cost of actively disengaged employees to be an incredible $300 billion in lost productivity! We can’t afford to keep working this way.
  • Related to the engagement issue, I’ve also found that despite the amount of corporate restructuring and downsizing that’s occurred over the past several years, organizational silos still remain. The result is many employees feel disconnected and disenfranchised.

In part 2 we will look at how marketers can incorporate internal marketing into their activities…