Why intensity and metrics matter when reshaping an organization’s culture: Lessons from Wells Fargo

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Wells Fargo’s challenges over the past few years have been well documented. It took a turn for the worse when it created an aggressive sales culture based on unrealistic targets.

To meet sales targets, employees opened accounts customers did not need, ordered credit cards without their permission and even forged customer signatures on paperwork.

The result was the creation of 3.5 million fake customer accounts many of which were then billed fees. Further investigations produced evidence that 570,000 customers had been sold car insurance they didn’t need.

These were failures of culture, leadership and ultimately risk management practices, something the bank had prided itself on during the mortgage crisis of 2008.

In 2017, the Institutional Shareholder Services (ISS), an influential shareholder advisory group released the following statement:

“The board failed to implement an effective risk-management oversight process in a timely way and that could have mitigated the harm to its customers, its employees and the bank’s reputation.”

It also suggested shareholders vote against the re-election of 12 of the 15 directors.

Most of the board was replaced over the next 12 months and Tim Sloan, the new CEO was tasked with cleaning up the mess.

To his credit, he did a lot of work with his top team to reshape the vision, values, and goals around the core idea of “helping customers succeed financially”. He also began to signal a shift in leadership focus away from shareholders:

“When you put your shareholders first—I hope Warren Buffett isn’t listening by the way—but when you put them first, then you’re going to make mistakes because you’re going to make short-term decisions that aren’t focused on creating a long-term, successful company.”

Sloan began dismantling the sales incentives that created the bad behavior and stopped paying employees on how many products they sell. Instead, they shifted the metrics to how often customers used their accounts and a range of customer experience metrics.

However, as with all changes, the devil is in the detail and employees had begun raising concerns again about customer-unfriendly practices emerging. A report by the Committee for Better Banks highlighted a continued culture of fear in which front line employees were not engaged in the change process but instead had it imposed on them.

“Honestly, it’s perceived as a joke — ‘Oh yeah, they’ve changed things,’ ” said Meggan Halvorson, 35, who works in Wells Fargo’s private mortgage banking division in Minneapolis. “I haven’t met anybody, personally, who believes what they’re saying or that it’s the case.”

Unfortunately, this has all been too little too late at least for Tim Sloan who was pressured into early retirement in early 2019.

In his final statement as CEO to the House Financial Services Committee he stated:

“We have more work to do, and that is an ongoing commitment by all of Wells Fargo’s 260,000 team members — starting with me — to put our customers’ needs first, to act with honesty, integrity, and accountability; and to strive to be the best bank in America.”

Within a month he would be gone.

What are the lessons?

Intensity and Velocity Matters

Changes need to be led with intensity and purpose from the top team throughout the organization. One of the reasons Tim Sloan was pressured into early retirement was that changes were not happening fast enough. There is a level of intensity and engagement required by the CEO to shift culture, and this is particularly important when the culture has gone bad.

Personally, “seeing the front.”

This term comes from the military and is based on the idea that leaders must see what is happening at the front lines themselves before making crucial decisions. The front line must be engaged in the process, the people doing the work matter and the daily interactions customers have with those people determine how the brand is perceived over time.

If change is imposed from the top, it is naturally resisted. The result is that employee initiative gets squashed, ownership is destroyed, and people keep their heads down out of fear of losing their job. In short, you get compliance, the bare minimum out of people.

If more direct attention had been paid to the front lines at Wells Fargo it would have been clearer what needed to happen to improve the customer and employee experience. If done correctly this will result in better business performance.

Metrics can help or hurt.

How people are measured can result in behavior that improves the customer experience or works against it. Clearly, the unrealistic sales targets at Wells Fargo resulted in the wrong behavior, that does not mean sales targets are bad; they are a necessary part of driving business performance. However, the way in which they are implemented matters.

Likewise, measures of customer experiences can be used in the right way or the wrong way. If they are used to performance manage, as a “stick,” they result in fear and resentment. Ironically, this works against the very thing they were designed to do which is to improve the customer’s experience. These metrics must be designed as learning tools that help employees develop and grow. This creates an environment that unleashes most people’s natural desire to deliver great experiences for their customers.

Transforming a company’s culture begins with a genuine desire by the top leadership to make things better. However, it then must be followed with concrete action by leaders at all levels.

If you want to catalyze customer-centric change across your organization, start by measuring how customer-centric you are today with the world’s only customer-centric culture benchmark, the Market Responsiveness Index.

Is it possible to compete with Amazon and win?

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For businesses everywhere, this is becoming an increasingly relevant question.

Not long ago most business could just ignore Amazon and say to themselves that’s fine for them in retail they are not operating in our industry.

Well, times are changing, and Amazon is competing in not only retail but consumer electronics, entertainment, enterprise cloud services and is eyeing opportunities in healthcare and payments.

The question for all businesses to ask themselves is how would we respond if Amazon entered my marketplace?

Well, one company did not have to wonder for too long, in fact, they have been competing with them for the past 10 plus years. With the rise of Amazon, many analysts predicted the demise of Best Buy, the US brick and mortar retailer.

So how to Best Buy fight back? They applied the same approach as Amazon – customer obsession.

In fact, under the new CEO, Hubert Joly, they undertook a transformation from a transactional retailer focused on store traffic and closing sales to one focused on building customer relationships for life.

Where does a customer-obsessed transformation start?

It begins with your customers and employees when a business is under attack as Best Buy was around 2009, a new vision and purpose for the business’s future needs to be articulated.

Joly launched a turnaround plan called “Renew Blue” in 2012 that was designed to address all critical stakeholders in the business beginning with customers.

To gain insights on what was happening at the frontlines, Joly spent a week working in a store and talking with employees. They told him the website sucked, it was slow and difficult to navigate, and the employee discount had been reduced recently by previous management. They also described how customers were “showrooming” coming in to see products then buy them somewhere else online.

Joly began with some quick wins, restoring the employee discount and taking price off the table by guaranteeing to match online prices.

This showed he was listening and more importantly acting on feedback, a critical trait for a customer-obsessed leader.

He then focused on customer experience, redoing the website, investing in search and matching Amazon on free fast shipping.

By focusing on their unique strengths, the in-store personal experience, they have been able to focus and start winning again.

Joly shifted the employee mindset by instilling a new purpose. In his words “we’re not in the business of selling products or doing transactions, we have our purpose, which is to enrich lives with the help of technology.”

“We don’t see ourselves as a bricks-and-mortar retailer. We are company obsessed about the customer and in serving them in a way that truly solves their unique problems.”

What does this mean in practice?

For Best Buy that means introducing new service offerings such as the “in-home Advisor” which involves best buy employees going to people’s homes for free and providing expert advice on how to better select, buy and install technology to enhance their lives.

A second example is “Total tech support” which involved Best buy taking ownership of any technical problem in the home and fixing it, all for $200 a year.

The third example of their innovation is a focus on aging seniors with an emphasis on helping them stay in their homes independently for longer. Through the smart deployment of technology they can detect if something is wrong and people need help, they can then intervene to make sure people get the help they need.

Customer-obsessed Leadership

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Customer-obsessed leaders don’t just say they are focused on customers they act on it and make decisions with a customer lens every day.

A great example is Best Buy’s relationship with Amazon, although fierce competitors on many fronts, they also see opportunities to collaborate and work together because it is the right thing for their customers.

“A lot of other retailers have been reluctant to sell their products. The reason we’ve sold their products is because we’re customer-driven.” says Joly.

In fact, recently Amazon chose to launch its Fire TV Smart TVs exclusively through Best Buy.

“Every management meeting we have, we don’t start with the financial results. We start with people. Then we talk about the customers, and last we talk about the financial results”

 “I don’t believe that the purpose of a company is to make money. It’s an imperative. It’s a necessity. But it’s not the purpose”

Hubert Joly

 

The turnaround strategy with its reinvigorated purpose and customer obsession around enriching people’s lives through technology are paying off. The ship has turned, and the future looks bright for this retailer once thought to be following Circuit City into bankruptcy.

How can you instill a customer-obsessed culture in your business? It starts by understanding your current culture and charting a path based on purpose, people and delivering great customer experiences.

Sources:

http://tcbmag.com/honors/articles/2018/2018-person-of-the-year-hubert-joly

https://www.cmo.com.au/article/659314/how-best-buy-shifted-from-being-retail-led-customer-relationship-driven/

 

Which is a better approach: customer-centric, product-centric or finance-centric?

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This is a great question that really comes down to a matter of the degree of emphasis put on these different approaches.

While the emphasis of some companies maybe product centric what makes those companies really successful is their balance with a customer centric approach. The best example is of course Apple, they build incredible products. At the same time they are incredibly focused on the users of those products.

The do not myopically focus on their products to the exclusion of customers, in fact they have a very strong customer obsession. This is demonstrated in their retail shopping experience, their focus on how users can get the most from their products through to the simply product line that makes it easier to determine the right product to meet a customer’s needs.

The danger is when a company becomes too product-centric and losses site of the customer experience. Products have lifecycles and lose relevance to their customer bases over time. Nokia and Blackberry have experienced this in the telecommunication market, they were thinking incrementally about product improvements and were blindsided by the way in which consumers would want to use their devices in the future.

Finance centric companies usually suffer from short-term thinking and a results orientation which can lead to great short-term results but that can catch-up to them when profits are out ahead of customer satisfaction.

Companies that do this continually lose the trust of customers and those companies find it very hard to grow organically as new products/services are often rejected by customers that have been burned in the past.

Think about a poor experience you had with a bank for example, the likelihood you are going to want to expand your relationship with that bank will diminish as a result…

Again like the product-centric company, a finance-centric company must add a balance of customer thinking to be more sustainable and successful over time.

We help companies understand how they can add the customer obsession element to how they do business, you can learn more in our MarketCulture Academy here

To get the right customer culture you have to be obsessive!

Passion Fuels Innovation

If you want to be one of the best at creating a consistently great customer
experience you have to be obsessive about it. Think professional athletes, think
sustainable weight loss, think the most customer-centric companies in the world
like Amazon.

Too many companies today have their weaknesses in their customer culture exposed – some with devastating effects for their customers, employees, and shareholders. Consider what’s happened in the banking sector, the retail sector, and the telecommunications industry.

The culture of companies towards customers is now exposed for what it is – both to their customers and to non-customers. Customer reviews, unwanted publicity for failures of service delivery as well as visual cues from its website and physical channels now expose a company’s customer culture – or lack of it.

This can’t be fixed using band-aids. A customer-centric culture is not a bolt-on. It has to be built-in. If your company needs to build-in a strong customer culture you will have to be obsessive about it – just like professional athletes, sports teams, and the world’s most successful companies.

Jeff Bezos, the founder of Amazon, has been obsessive about customers, since its inception just over 20 years ago. He has made sure that everyone working at Amazon is also obsessive about customers.

This means being obsessive about getting and acting on customer insights, giving permission (empowerment) to employees to do what’s right for the customer, working in collaborative teams to provide greater value for customers and aligning everyone in your business to deliver a customer-centered strategy.

This is not some nice intangible idea anymore, we have been obsessed with developing a proven methodology with measurement and best practices that any company can use.

If you really want your organization to be customer-obsessed, learn more in our MarketCulture Academy we know the way!

Amazon Founder Jeff Bezos explains how he drives a passion for customer obsession with his senior leadership teams

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Creating a customer-obsessed culture requires strong leadership and one of the very best exponents of the practice is Jeff Bezos of Amazon.

Even though Amazon now employs more than half a million employees and serves more than 300 million customers, Jeff Bezos personally reads every customer complaint email sent to him. While he does not respond to them personally, he is immersed in them as a way to stay in touch with the reality of what is going on in the business.

We call this, customer immersion, and it is one of the most important activities any CEO can engage in.

So how does he manage the wide range of customer complaints/feedback he receives directly?

He is known to forward the email directly to the leader accountable for that area with a simple “question mark”. The question mark is his short-hand for can you look into this? why is this happening?

Leaders know they are then on the hook to drill into the issue and find out what is happening and resolve it in a systemic manner, ie so it does not occur again!

And this is the crux of what makes a customer-obsessed culture different, leadership takes this seriously and follows through on making the changes necessary so that the source of the complaint is eliminated…. this simply does not happen in most organizations.

This approach gives Bezos a frontline insight into what customers think and experience. It is a huge leadership advantage as he can maintain a pulse on what is actually going on across Amazon’s massive and complex business.

In this great article by Julie Bort, Jeff explains:

“The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There’s something wrong with the way you are measuring it.”

For 10 years MarketCulture has helped leaders around the world understand how to engage employees in building a customer-obsessed culture. The MRI Assessment provides valuable feedback to leaders they can act on to enable employees to deliver great customer experiences.

MarketCulture has proven scientifically that a stronger customer culture will drive increased business performance through retention of customers and increased advocacy.
Contact us now to find out how we can help your company become customer obsessed.

Culture eats customer experience quick wins for breakfast – its time to get truly customer obsessed!

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Apple’s culture continues to reinforce Steve Job’s approach to designing using a customer lens and working backward.  Source: Apple’s WWDC18

A recent article by Nadia Cameron from CMO highlighted a panel discussion in which many leaders acknowledged the quick wins for customer experience improvements are over.

It’s great to see more and more senior leaders recognizing the need to go deeper and look at organizational culture. Whilst it can be more difficult work, it is also longer lasting and more sustainable if leaders put the effort in to change the cultural emphasis towards making customer’s lives better.

So how are CMOs and other leaders looking to address culture?

One of the best examples comes from Rachael Powell, the Chief Customer and People Officer for Xero, they are taking an inside-out approach by focusing on their people and how they impact the customer’s experience.

Xero has recognized the intimate connection between how employees are treated and how they, in turn, treat customers:

“It really is about starting with our own people first who are the biggest ambassadors for our brand, winning their hearts and minds, then resonating that out to our channel, which is bookkeepers and accountants, and ultimately the end customer sitting at the end of the spectrum,” she said. “If we achieve this, we go from having 2000 ambassadors, our people, to having hundreds of thousands of ambassadors globally.”

They also appear to have a strategy for shaping their culture over time with 2 of 6 pillars sitting with Rachael: “great people and teams, and love and protect our customers”

It will be interesting to follow the Xero journey as they continue to grow!

Over the past 10 years, MarketCulture has researched 100’s of companies including Google, Virgin, Amazon, and Apple to find out what they do differently when delivering great customer experiences.

Could you create change if you knew the strengths and weaknesses of your company compared to these companies?

The MRI assessment provides the golden insights to create change! Contact us now and we will show you how!

Why Customer Experience fails in organizations!

Contemplating cx failure

Recently I asked a colleague, Sean Gallagher, President at Influence
Success, to review our book, The Customer Culture Imperative,
compared with other books that address the area of customer
experience.

He said”: “Many books on customer experience are useful and
interesting reads. And I found Professor Phil Klaus’ book (Measuring
Customer Experience) and Fred Reichheld’s book (The Ultimate
Question 2.0) very useful because they are based on real scientific
research.

What do Zappos, Starbucks, Ritz-Carlton, Oasis, Disney, Nordstrom,
Apple, and Amazon have in common regarding how they run their
business? They all share best practice techniques in a variety of
areas that anyone can theoretically copy. Countless number of
companies have tried to copy these best practices and failed. Why?

All these companies are amazingly different. What is the common
thread used to drive superior customer experience and superior
profitability at these companies? Their cultures! And all their
cultures are different on the surface. Amazon is very different from
Zappos, even though Amazon owns Zappos.”

Sean said: “For my money, the most valuable (and readable) book on
customer experience is called The Customer Culture Imperative: A
Leader’s Guide to Driving Superior Performance. The authors studied
the academic research that uncovers the elements of culture that
enables a firm to create a strong customer-focused culture that
delivers both superior customer experience and superior
profitability. They use numerous real-life examples to illustrate the
elements of culture that make all the companies listed above different,
but the differences are rooted in the same soil.

Customer experience best practices are important but are bound
to fail unless rooted in the soil of an organization’s culture.

The Customer Culture Imperative is the best book I’ve found for insights
on transforming a culture that can deliver both superior customer
experience and superior profitability.”

Our vision at MarketCulture is to help leaders understand the importance of building a customer-obsessed culture by engaging of employees. Our assessment, the MRI, provides valuable feedback to help leaders act on what is vital to creating great customer experiences, which will lead to increased business performance.

Is your company customer obsessed? MarketCulture has a unique tool that can provide the strengths and weaknesses of your customer culture against 100’s of companies like Virgin, Apple, Google and Amazon. Ask us for free pilot today!

How do leaders become customer-centric?

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Source: OCEAN/CORBIS

To answer this question it can be helpful to start with the opposite question: why aren’t leaders Customer-Centric? In many cases, it appears to depend on chance!

There are many reasons leaders are driven away from being truly customer-centric:

  • the dominant profit and shareholder value focus in many organizations,
  • the siloed and internal focus in most large corporations,
  • the pressure on short-term results at the cost of customer relationships and customer value.

But these are not the most important reasons!

In our research of more than 65 senior leaders around the globe customer-centric leadership occurs by chance – an upbringing in a family that runs a small business, working for a boss who happens to be customer-centric, an experience in a business that is ruined by lack of attention to customers.

What is lacking in organizations and tertiary learning institutions is the systematic training and development of leadership with a specific customer-centric focus.

There are virtually no university courses around the globe dedicated to the teaching of customer-centric leadership. Most organizations do not have this as a focused L&D program for senior leadership, the extended leadership group or for prospective and aspiring leaders.

How can you expect leaders to have the new currency of customer-centric leadership required for success by the new world of disruption and customer-driven strategies if you leave it to chance?

There are simply too many organizational pressures working against it.

Don’t leave your organization’s fate up to chance!

There is an answer. Research reported in The Customer Culture Imperative tells you what is required. Learn more about our dedicated Learning and Development programs for leaders at here.

Can you continue to charge customers after they are dead?

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Source: Chris Roy Taylor https://twitter.com/chrisroytaylor

Many company leaders don’t know the difference between front-line customer focus and real customer centricity (and some don’t seem to care). This leads to devastating results.

These days many companies collect a large amount of data from customers and use this to analyze to what extent they are customer-centric. This includes customer satisfaction data, customer advocacy metrics like net promoter scores and other customer feedback related to customer interactions with the company.

They fail to realize that these data averages are only a small part of the picture – and not the most important part.

Authentic customer centricity is a culture across all parts of a business that reflects a mindset that believes “what’s best for the customer is best for the business”. It also requires employee behaviors and company processes in every business unit, function, and level endeavor to meet the needs of their customers. Also to provide value for money and deliver a consistently great customer experience – before, during and after all customer interactions.

The current Royal Commission into banking practices in Australia has unearthed some very unsavory practices – charging fees to some customers for services they never received, continuing to charge fees on customer accounts after people have died – and continuing these practices over several years. It is also uncovering the “bad” advice for some clients by some financial planners – something already uncovered in previous investigations. This is clearly a failure of leadership either governed by self-interest or not really have the customers’ interests at heart.

Why is this persisting? It is because many leaders in this industry do not understand the difference between front-line customer focus and real customer centricity!

These same banking organizations have studied their own customer service scores and concluded they are customer-centric. They fail to realize that weaknesses in customer culture can be devastating. Even now at the early stages of this banking investigation, customer and community trust in banks is dramatically reduced and their share prices have dropped.

It is time leaders spend some time understanding this difference and taking action with all their employees to embed a true customer first culture in all parts of their businesses. If they don’t they will inevitably suffer the fate of the banks – more regulation, lost community trust, reduced profitability and customers lost to industry disruptors.

Find out how to do it in The Customer Culture Imperative.

Learn how to implement a methodology that measures and benchmarks your customer-first culture against the most customer-obsessed organizations across the globe.

Learn how to develop a customer culture roadmap and initiatives that will reduce your culture risk and create sustainable long-term customer trust and business performance.

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 learning to implementing some of the ideas in our book: The Customer Culture Imperative. 

…AND now you can learn how to in our MarketCulture Academy