Category Archives: market culture

What drives leaders to become customer-obsessed?

Mature Man Clutching Arm As Warning Of Heart Attack

I was speaking recently with Rashid Velemeev, CEO of Sindbad Travel, one of Russia’s biggest online travel booking agencies based in St Petersburg. We were discussing customer-centric leaders and he mentioned that he believed an important characteristic is that they feel internal pain.

They can’t accept the way things are and they must change it to relieve their pain. It may be an experience of very poor service or of a product that does not work properly or an experience with people in a company who just don’t care. It creates a burning desire to do something about it.

When we think about this we realize that many businesses are started today because the founder has had a very poor customer experience and feels compelled to fill the gap created in the marketplace. It becomes a passion to make things right and if implemented well becomes a very good business.

Are you a leader that feels pain because things are not done right in your business to consistently deliver customer satisfaction? Do you feel the pain personally with each customer complaint? If so you can relieve that pain by implementing some of the ideas in our book: The Customer Culture Imperative.

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.

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?

Why most companies don’t deliver great customer experiences

Poor Customer ExperiencesWe are all customers and we know what a great customer experiences feels like. We also know that a great customer experience influences our behavior, we want to talk about it with friends and we feel good about doing business with the company that provided it.

We know all this and yet we see time and again examples of poor experiences, just like this Range Rover customer above taking revenge on the company that clearly did not create the right car ownership experience. Why does this happen?

In our work with clients we have found a number of key reasons:

1. Culture – culture drives everything in an organization.  It creates the expectations for how employees behave. It can be left to chance or actively managed. The culture develops not from what people say is important and valued but by what is visibly shown to be important through the way people behave.

For example many companies say that customers are important but then will make decisions that will directly disadvantage the customer in the interests of the business. Bank fee increases, hidden charges, confusing pricing models are great examples of companies trying increase profits without providing customers with any more value.

This is usually the result of short term profit pressures. The message: customers are important until we need to make our numbers – then all bets are off!

2. Goaling – what’s measured gets done. The metrics a business uses will drive behavior, if none of those metrics include measures that are important to customers, people will not focus on the impact they are having on customers.

3. Hiring – hire people that buy into the company’s mission and actually want to add value and contribute to delivering on it. Specifically put hiring practices in place that filter out those that can’t connect their work with customers. Test potential employee’s mindsets, do they have customer friendly skills like the ability to listen, accept feedback, empathize with other people’s positions.

4. Silos – silos can be great, they drive efficiency and specialize expertise but when they become too competitive and an “us and them” mentally develops collaboration is crushed and customers will suffer.

So what do companies with strong customer experiences do right?

Improving the customer experience is about changing a company’s culture.

Companies that can achieve a customer culture take improving the customer experience as seriously as improving financial outcomes.

Our studies of organizations around the globe that have built strong customer cultures have revealed some major themes:

Strong and visible leadership

Leaders are not only committed to the customer experience but also able to instill that commitment in the rest of the organization. There are usually two primary  leaders involved in the process – a CEO or business unit leader who sets the vision and a head of strategy or customer experience who helps execute the strategy. In addition a guiding coalition or customer engagement council that brings in representatives of the broader leadership team it established to oversee progress.

These leaders commit to changing the way they do things in a way that sends the right message to the organization – that customers are important.

A clear mission, vision, and values

A clear purpose beyond “profitable growth”, one that actually does inspire and connect with people emotionally and is contextualized in a customer frame is crucial. This should drive a clear set of behavior standards that capture the intent of the organization and create accountability for customer service and the customer experience among staff members. Amazon’s mantra is “save customers money” and it drives everything (more on this here)

These are not just words on a page. Rather, companies must reinforce these beliefs and behaviors at employee inductions, coffee talks  and the regular team meetings. Companies should use real customer examples to ensure that the mission, vision, and standards resonate throughout the organization.

Customer Immersion

In larger organizations people get disconnected from customers, they lose site of the value being created and what its actually like to be a customer. A process of regular customer immersion sessions helps executives and employees regain that connection. This may include call center sessions, customer visits, bringing customers into internal planning sessions and so on.

Consistent Communication

All messages should incorporate customer focused elements so that managers and staff see the customer experience as a strategic objective that is as important as other financial outcomes. It’s essential that companies consistently communicate what constitutes the right customer experience not only in the strategic plan but also in job descriptions and performance evaluations.

Buy-in from all staff

Defining the reasons for the change and the personal value of being involved in a customer culture change initiative is crucially important. All staff need to understand the reason for the shift in focus and how it will benefit both customers and the business. Staff then ultimately need to see it is in their own self interest to change the way they go about their work.

A way to measure culture change

External and internal measures can be used to assess whether a company is actually changing, the image below shows the relationship between the internal measure of “Customer Culture” relates to the external measure of customer satisfaction and ultimately profit growth.

Customer Culture Foundation Pyramid

A customer culture can be measured using the Market Responsiveness Index which allows companies to see the progress they are making against a benchmark of companies around the world.

A message to leaders

Improving the customer experience is about changing a company’s culture. This change is the most powerful, legacy-defining step a leader can take to improve the performance of a business and the engagement of employees. Senior executives must not only take responsibility to make the customer experience a priority but also must allocate the necessary time and resources to make it a reality.

While there is work involved, it does not necessarily need to be expensive and the payoffs are enormous.  Show me any massively successful company in almost any industry and 8 out of 10 times they have a strong foundation based on a customer culture.

Is Apple heading for a fall?

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?

Great customer focused leaders – Jeff Bezos

Jeff Bezos - a Customer Focused Leader

Amazon, under the leadership of Jeff Bezos, has been a great success story. It really created the online retailing sector with an initial focus on books and now has expanded to sell just about everything that can be sold online. It has been an innovator with new cloud services, the online shopping experience and the Kindle.

Part of Jeff’s success he attributes to the idea of having no regrets, taking risks, and having a powerful customer focused mission to drive everything. These are three ingredients key for genuine customer focused leadership. After all being customer focused requires listening and understanding customers better than the competition. However, at some point risks need to be taken to use that knowledge to create new solutions that may or may-not hit the mark.

NO REGRETS

He is what Jeff has to say about his regret minimization framework:

“I projected myself to age 80 and I looked back…and I said, ‘What I want to have done at that point is to have minimized all the regrets in my life.’

When you are in the thick of things, you can get confused by small stuff. I knew when I was 80 that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re 80 years old.

At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way, in the regret minimization framework, it was incredibly easy to make the decision.”

KEEP TAKING RISKS

As companies like Amazon grow, there is a danger that novel ideas get snuffed out by managers’ desire to conform and play it safe.

Jeff describes how Amazon deals with this issue:

“You get social cohesion at the expense of truth,” he says. He believes that the best way to guard against this is for leaders to encourage their staff to work on big new ideas. “It’s like exercising muscles,” he adds. “Either you use them or you lose them.”

A MISSION THAT DRIVES EVERYTHING

Another key part of Jeff’s leadership has involved a mantra to drive alignment of all employees around one mission – “to save customers money”

While their vision is publicized as “Our vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

The mission is something I have heard from a number of employees in different parts of the company (IT, marketing, HR) and they say it drives everything they do. It creates alignment and focus around customers in a powerful way.

Does your leadership style include these elements?

The link between customer focus and employee engagement

Employee Engagement and Customer Focus

Customer focus and employee engagement are two sides of the same coin.

Clearly if your customers are going to be satisfied it takes an engaged workforce that is passionate about their work and holds a strong desire to deliver great experiences.

What we have found to also be true however is that employees become disengaged when they lose meaning in their work. This meaning can only come from recognition and acknowledgment from customers (whether internal or external).

In our work with our clients we have found when increases in customer focus occur (measured with our MRI tool) this is followed by increases in employee engagement (measured with the Gallup Q12 tool).

It is the result of getting on the same page as to the purpose of the business, namely creating customers and the personal satisfaction that comes from doing valued work.

What has your experience been? Does customer focus and employee engagement run in tandem in your company?