Category Archives: Market Driven

7 ways to make a customer culture stick

how to make customer culture stick

Research and experience show there are 4 stages to getting and keeping a customer culture: Initiation, Implementation, Embedding and Reinforcement. In my last two posts I outlined the actions to take at the initiation and implementation stages. In this post I focus on the 7 actions to take during the embedding stage.

The focus of this stage is on institutionalizing the customer culture through supporting systems, on-going training, increased employee empowerment and accountability of all individuals and teams for delivering an improved customer experience.

1. Formalization of customer culture through symbols, rituals and artifacts

This often includes organization structure changes, more open office designs, images of customers taking precedence over images of products, customer invitations to corporate meetings and cross-function teams evaluating new market opportunities.

2. Development of customer focus behaviors at leader and individual levels

Key performance indicators measuring the level of customer focus are formalized for performance reviews and designing personal development programs.

3. Delegation of decisions from the Customer Engagement Council (made up of senior and influential leaders) to all organization members

The power to make decisions on behalf of the company shifts to all employees within an agreed framework. This new empowerment and accountability is sometimes hard to accept by long-standing employees. Some companies have used a “buddy” approach to help less experienced staff gain new skills and confidence.

4. Measurement of customer culture

Culture change is not a “bolt-on”; it is a “built-in” process. Effectively done, it can’t be “unbolted”. Measurement covering the breadth and depth of the organization is necessary to determine to what extent customer culture has been built in.

5. Measurement of customer satisfaction, loyalty and advocacy against targets

Ongoing measurement is part of customer culture embedding and provides a frequent benchmark of customer engagement performance. It guides how the organization needs to adapt to changing market trends and customer needs.

6. Formal alignment of rewards and recognition with customer metrics

Remuneration systems and promotion is formally tied to customer culture behaviors and customer engagement performance.

7. On-going training program

This is valuable for two groups:

  • new and recent hires
  • pockets and groups within the organization found to be lacking a customer mindset and relevant skills

Documented case studies of successes and learnings are often used to demonstrate successful customer engagement experiences.

My next post will outline the actions required to reinforce the customer culture and avoid the complacency and arrogance that frequently occurs with sustained success.

7 Ways to Boost your Customer Focused Culture

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?

“Culture is not the most important thing, it’s the only thing” – Costco’s Jim Sinegal

The Costco Experience

Customers walk in to buy six months worth of toilet paper and walk out with the latest flat screen TV and a case of French Champagne.

Where else would this type of consumer behavior be possible but at Costco, the US’s most successful warehouse club/retailer.

Costco has an interesting mix of customers, it tends to attract more affluent customers in as great a volume as lower income customers. It is very selective about the products it chooses and is always varying the merchandise on offer.

Customers tend to shop their regularly and come back for that intangible feeling that is created by the store’s atmosphere. It is always busy, goods are stacked in large warehouse style pallets, there is a “racetrack” style circuit that shoppers are guided through which means that get to see virtually everything on offer each visit.

Why is Costco successful?

One of the key reasons is Costco’s ability  to allay all the fears consumers have when making purchase decisions:

1. Will I get the right product for my needs?

2. Will I get the best price available?

3. Will the product be high quality

Costco takes the risk out of purchasing by having one of the most generous product return policies on the planet, I recall seeing a women return a vacuum cleaner that was at least 5 years old and considerably used. She was refunded – no questions asked.

Costco’s pricing is always tracking pricing of their competition both online and offline and driving hard bargains with suppliers to make sure they are super competitive. They mark up their products by 15% so if they buy at the right price that sales price will always be very competitive.

Costco carries well know often premium brands (they even sold Apple products for a time), their own Kirkland brand has built a reputation as a high quality store brand that reinforces Costco’s value leadership position (great quality/great price)

This strategy puts customers at ease, confident they will be getting great value on high quality products.

Another part of the strategy is to sell in bulk which means consumers buy more than they usually would of particular products. When consumers see the pricing they can get per unit on bulk purchases they can’t resist.

A powerful customer focused culture.

Jim Sinegal, Costco’s former CEO, in a recent CNBC documentary on the “Costco Craze” described the secret of Costco’s success was its culture. Jim has created a culture where there are no divisions between leadership and staff, everyone is on the same page when it comes to understanding Costco’s customers and what makes their model work. Every employee knows their role in creating the right environment for customer’s to have the “Costco experience”. Employees are paid fair wages (higher than competitors) that reflect their importance in contributing to the customer experience.

As CEO he is constantly on the move visiting Costco’s 580 stores across 9 countries every year, getting direct feedback from customers and his employees as to what’s working and what is not. Remember this is a $89 billion business.

How many CEOs set that tone for their organizations?

See more on the CNBC documentary below:

Inside the Box: What’s the secret to Costco’s success?

AND if you want to build this capability in your organization check out our MarketCulture Academy.

Customer Metrics: Measure what matters most to customers

Key Customer Metrics

As business leaders we tend to pay a lot of attention to the metrics important to the business, that is, revenue, cash flow, profitability, growth and so on… but the real drivers of these business outcomes are customers.

So the obvious question becomes what customer metrics should I be tracking to make sure my business metrics continue to head in the right direction?

Well there are a number of key customer metrics that must be considered for every business:

1. Customer Satisfaction

As a first step it is important to track customer satisfaction, this will provide some inputs as to how well the business is performing on delivering what it promises. But remember customers have already paid for satisfaction, they expect to get what they paid for. So high levels of dissatisfaction are an obvious and immediate cause for concern.

Satisfaction is not enough, even highly satisfied customers can and do switch to alternatives so it is important to also look at Loyalty and Advocacy. That brings me to the next question (Fred Reinhold calls the “Ultimate Question“) How likely are you to recommend us? Loyal customers not only bring you repeat business, they also expand your customer base through positive word-of-mouth.

2.Net Promoter Score

The net promoter score is a simple tool designed to identify 3 types of customers, promoters (advocates with strong positive word of mouth),  detractors (negative word of mouth) and those in the middle. The goal is to drive up the number of promoters as a way of driving business growth.

Many of the most customer-focused businesses in the world use NPS, see below a list of the current top 10 Netpromoter scores in the US:

USAA – Banking = 87%
Trader Joe’s = 82%
Wegman’s = 78%
USAA – Homeowners Insurance = 78%
Costco = 77%
USAA – Auto Insurance = 73%
Apple = 72%
Publix = 72% = 70%
Kohl’s = 70%

Source: Satmatrix

3. Customer Value Analysis

This is a more advanced metric specifically looking at the value a customer places on what you offer. Value consists of an equation that includes CUSTOMER PERCEPTIONS  of price,  service and product quality. Customer value analysis looks directly at how customers view your business vs. your competition and provides you with valuable information on what you might need to adjust in terms of both product and service quality, as well as price, to increase market share and revenue.

4. Life Time Value of Customers

I talk about this in some more detail in these two posts:

Part 1: Understanding Lifetime Value of Customers

Part 2: Calculating Lifetime Value of Customers – a simple example

Something not covered however was some of the inputs to Customer Lifetime Value which in themselves are useful metrics:

Customer Acquisition metrics include customer awareness levels, the information sources customer use to make purchase decisions, and cost of acquiring a customer.

Churn (%)  measures how many customers are leaving, that is, customer attrition.  Churn is a commonly used metric related to customer retention. Specifically, this is about knowing how many customers are defecting and why.

Customer Complaints are usually an early warning signal that something is wrong. Most customers will not complain they will just take their business elsewhere. Complaints although often difficult to hear are a gift that can help course correct.

5. Your own Customer Culture

How customer obsessed is your organization? How would you know?

This is the question we received from a CEO of a Global 1000 company a number of years ago. It led us to the development of the Market Responsiveness Index (MRI) to answer that very question.

This is an organization-wide metric design to measure the behavior of employees and the level of attention they pay to customers in their daily work.

It is a one of a kind tool that allows you to benchmark your company versus the best in the world, you can check it out here.

What Criteria should I use when deciding on Customer Metrics?

  1. The metric drives business results
  2. The metric correlates strongly with business results
  3. The metric is something you can influence
  4. The metric can be measured accurately
  5. The metric can be measured consistently
  6. The metric can be measured cost effectively
  7. All the stakeholders agree the metrics meet these criteria

Ultimately you want to choose the right metrics for your specific business, they should be tailored to the unique business drivers and business strategy.

Why implement customer metrics?

Tracking customer metrics is important for many reasons, but the most important reason is cultural. It gets everyone on the same page, aligns people across the different parts of the business, and leads to a customer-focused culture of success. You should celebrate wins when a key customer metric reaches a new and important milestone. Choosing the right metrics and celebrating progress against them are incredibly important to building a strong customer culture that can work together and grow rapidly.

What customer metrics are you using?

The only 2 sources of competitive advantage

Creating a Competitive Advantage

Jack Welch, the former CEO of GE, suggested there were only two sources of competitive advantage for businesses. Given his track record at GE – taking its value from $14bn to 410bn when he left in 2004 – he knows a thing or two about competitive advantage.

Competitive Advantage #1

“Learn more about your customers faster than the competition.”

What do you know about customers that your competitors don’t?

Competitive Advantage #2

“Turn what you learn about customers into action faster than the competition.”

How do you collect customer knowledge and provide it to the people that can take action?

Companies that master these two sources of competitive advantage stay ahead of the competition, they are the market leaders, they have customer cultures.

Our research shows they outperform their competitors on the metrics that matter – customer satisfaction, innovation, new product success and sales revenue growth.

How does your company perform?

The role of inspiration and emotion in customer focused culture change

The logical rationale for being customer focused is very hard to argue with.

We know that if we can make great products and create an awesome customer experience we will be more successful.

And yet we often find we get stuck in a short sighted web of fear and self interest that results in us not acting in a manner that will get us and our businesses the best results. In short culture stops us from making things happen.

At MarketCulture we have found that rationale arguments are not enough, people must emotionally buy-in to the idea of improving their own and therefore their organization’s customer focus.

When we can trigger both the rationale and emotion drivers we see change happen.

I have embedded a short video that describes the type of change we are looking to help our clients undertake, would love you feedback on if you think it is an effective way to communicate the message.

Making customer focus real: Being prepared to get, share and act on feedback

Listening to Customer Feedback

Are you listening to your customers?

Telstra has recently announced a new initiative to publish the customer ratings for its stores on its website. Nothing new for businesses in the US, thanks to services like YELP, but a significant step forward for the dominant Telco and MarketCulture customer in Australia

Telstra’s Country Wide Executive Director, Rebekah O’Flaherty recently announced the move on their blog, she also explained how the information would be used:

“We use these scores to guide our service improvement programs – and to identify and cheer on our top rating stores. “

It great to see this is not just lip service to the idea of customer service but a clear way to operationalize a concept that often sounds great in theory but is so often not acted on.

To see the full story click here.

Strategy from the Outside In

Here at MarketCulture we are big fans of the work of Professor George Day. He has written a number of books over the years around the idea of “Market-Driven” organizations and their ability to drive better performance outcomes.

Below is an overview of a webcast I will be hosting with him on November 30th:

What do Toyota, Barbie and Dell have in common? Each succumbed to inside-out thinking and lost their market leadership. They lost sight of the core purpose of a business: to create and keep customers at a profit.
This webcast offers an antidote to this self-defeating mind-set with a proven outside-in approach to strategy. Winning strategies are viewed through a customer value lens, and illuminated by deep market insights.

WHEN: Tuesday November 30, 2010 – 1 PM PST
Learn More and Register