Are Customers Trying to Tell You Something?

Posted on January 14, 2012 by Doug Morse

Yes and it is not good news. Is your business a potential burning platform? Are there warning indicators, direct or indirect, that signal a pending disaster? Are competitors tapping the reservoir of opportunity and providing your customers what you are not? You may be operating with symptoms that reflect a major problem for your business.

How do you prevent them from causing your own business demise? How do you prepare for these risks and successfully prepare to retain and expand your customer base? The first step is a quick assessment of your business to determine if the platform you are standing on is beginning to burn or vulnerable. Review the following key indicators to see if your business is exhibiting any of the symptoms of a current or future problem.

Your business exists because your customers allow you to exist. Customers are a large asset for any company. Are you effectively managing the customer assets? Has the global economy damaged your customer relationships and do you see some of these warning indicators?

Business/Risk Indicators (Yes or No)
1. New competitors are winning in your space with less robust offerings
2. Price sensitivity seems to be increasing in your marketplace
3. Your previous uniqueness/brand of products/services is being replaced by cheaper alternatives
4. Your business results are not meeting your expectations and you can’t put your finger on why.

Investment returns/ROI Indicators (Yes or No)
5. Your customer satisfaction (CSAT) or NPS (Net Promoter Score) or like investments have not yielded the expected results you anticipated.
6. Your cost reduction and outsourcing programs have damaged your relationships with your customers.
7. You cut the budget for customer care or service to make up for lack of profits elsewhere

Employee Indicators (Yes / No)
8. Your employee satisfaction metrics are declining
9. Your key employees or top performers are jumping ship.
10. Your employees are focused more on internal issues like their jobs than taking care or engaging with customers.
11. Career development activities have been curtailed or eliminated

Customer Experience Indicators (Yes / No)
12. Your customer orders, same store sales, bid performance, share of customer’s wallet or other customer performance metrics are declining or growing more slowly than competitors.
13. Your customer complaints, escalations and negative social network traffic are rising.
14. Your customer satisfaction metrics are not improving or trending negative.
15. Your customers are not as engaged as they used to be with you and your business.

Understanding the threat to your business:

An Explosion is Imminent IF:
You answered yes to more than 10 of these, abandon the platform immediately and save your company. This should be an immediate call to action with expert resources. The risk to your company is beyond your control, change has to happen NOW.

You See Flames IF:
You answered yes to 7 or more, you see the flames. A crisis is in progress and immediate action is required. Do not let it get out of control. You still have time to save your customers if you act strategically NOW!

You Smell Smoke IF:You answered yes to more than four, then you are starting to smell the smoke of the burning platform Take pro-active actions NOW! Get the help that you need to understand the problems and potential solutions.

Timing is critical. The financial meltdown in recent years has created a crisis that deeply affects your customer’s view of your business. Focusing on your customer assets is crucial for any successful turnaround of your business. More importantly there is an opportunity to get ahead of your competition and gain market share and share of wallet. The solution is the implementation of a customer experience strategy that encompasses your entire enterprise and helps you create customer success and build deeper relationships. The Services Transformation and Innovation Group LLC (www.servtrans.com ) has the experience, capability, proprietary tools and methodologies to properly assess the warning indicators, develop critical improvement action plans and assist you in executing a successful program focused on the customer. Interested? Contact us for more information and a self assessment of your business.
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Posted in Business Strategy, Customer Experience, Net Promoter / Customer Satisfaction, Return on Innovation, Service Innovation | Tagged , , , , | Leave a comment

Are you lying to your customers?

Posted on October 11, 2011 by Doug Morse

Likely the biggest sin committed by companies is the violation of trust and therefore the relationship. Directly lying or deceiving a customer is unforgiveable and sometimes literally criminal. This should be obvious to anyone who reads this, but what about the perception that you are lying or covering up even when that was not the intention? In looking at customer experience cases this happens more often than you would think.

Let me relate a story that recently happened to me while shopping for a new car. Being tech savvy, and like over 50 % of all car buyers, I did my online research. When I found makes or models that I might want I went to the manufacture’s website. Most of these sites have an option to “build and price” your vehicle. You select the model, colors, options and accessories then submit the order for pricing, search inventory or get dealer quotes. By the time I go into a dealer for a particular car, I know what I want and I am armed with information, pricing data etc. I am a well informed consumer. By recent statistics from the automotive industry and national dealers association I am a part of the majority. Many dealerships do more business through the internet or internet leads than people who happen to visit their show rooms.

Knowing that a majority of your customers are well informed should change the way that you treat them and how your sales staff is trained, wouldn’t you think? As a customer experience junkie I observed that the opposite is true in the automotive industry. The online experience and in person experience is quite different. Why? My observations went beyond just my personal buying experience as I observed the phenomena at many car dealers and all tiers from low end / low cost to high end luxury segments. At the core was an information gap between the online marketing information from the manufacturers and the direct sales staff at the dealership. When there is conflicting information between the manufacturer’s website and the dealer sales person; which one will most people choose to believe?

Here is the scenario: You gather information from the “official” website about feature / function and options. Knowing what you want and armed with what you think are the truthful facts. (Of course, the web never has incorrect information, does it …. ) you then visit the dealer only to have the salesperson try and correct your misconception that what you saw online is ACTUALLY available. In other casess the salesperson’s information about feature and functions is fuzzy or lacking. The perception that you will have is that the live person in front of you is at best ignorant or in the worst case a liar. Neither of these cases may be true but the perception is a key driver in the customer experience.

In my observations there were several different scenarios. The worst example came from a highly respected dealership group that is known to use all of the right customer experience management techniques but the sales and service people did not know the products they were selling. Here are the different scenarios I observed across the car dealers spectrum:

1. The manufacture’s website and online materials were quite good but the people at the dealership level did not know their product. They were good at the sales processes and treatment of customers but seemed to assume the cars would sell themselves. The sales people were not well informed about the products and had no idea what the manufacture’s site said or did.

2. Inconsistent information between the online manufacturer’s data and what the dealers had been told / trained on by the manufacturers rep. Online you could configure certain options but the dealer was told that in fact those options would not be available for 6 -12 or might never be made available. They knew the product and had more realistic information than could found on the website but the data was conflicting across multiple sources.

3. Some dealers chose to ignore what was shown on the manufacturer’s website and only sell the cars, services or products that they had in hand vs. what the consumer really thinks that they want. The perception is that the dealer has internal incentives to sell you something different and is therefore no longer a trusted advisor.

4. The sales people not knowing or understanding the competitive products (via public internet sites). This includes services or dealers add on items like extended warranty or paint treatments that might be available cheaper in the aftermarket. There are hundreds of sources of data about new cars outside of sponsored sites. They need to be consistent and updated as information changes.

Simple steps can improve the customer experience in the scenarios above. First, empower and train your employees. They should be as well informed as their customers. This means taking them outside of their comfort zones and making sure that if they do not know something they know where to find out. As I have said many times, customer experience is a team sport. At the very least the front line employees (really everyone ) should know what the marketing thrust is and what is on your website, your competitor web sites and they should test the experience as if they were a customer. If there are inconsistencies between the channels of information get them corrected or at least be able to explain them. Take an outside – in view of the world. Understand what your customers are experiencing from their viewpoint and broaden your perspective. Know the competition and your value to the customers.

What does this have to do about lying to your customers? These scenarios do not just apply to the automotive business. In each of the cases stated above the greater the disparity and inconsistencies of the information provided to the consumer, the more that there was a distrust of the people and organizations involved. When confronted with conflicting information between the websites and the live interactions, consumers felt that there were other motives in place that were not in their best interest. In the case where the dealer that was not knowledgeable about their own products the consumers felt like they were being lied to because the dealers gave answers that were inconsistent with the manufacturer’s online information. There was no intention to lie and the information might not have been incorrect but the perception caused distrust in the relationship. This can happen in any business where the information provided to, or by, the frontline staff is inconsistent with other public information. In the automotive case the dealers are mere representatives of the manufacturer and the information across the channels was not consistent. Information sources go beyond your four walls and may include suppliers, sales channels or even social media.

Are the people in your company perceived as trusted advisers and partners or liars? How you treat, train and engage your employees will make all the difference in the customer experience. Bad customer perceptions are never designed that way. It happens whenever there are organizational disconnects. In the car examples, the dealership is the customer of the manufacturer. The end consumer is only a customer of the dealership. This type of channel relationship happens in many industries. If everyone is working at optimizing their own domain, the customer will see the inconsistencies from their vantage point. Again, customer experience is a team sport and organization alignment is important.

Here are the key lessons from this:

1. Assume that your customers are likely well informed and that you need to understand their potential sources of information. Ensure that your customer facing people are armed with the right tools and information sources so that they can be perceived as experts and trusted advisors.

2. Customers will believe what they believe, do not argue with them or dispute their sources of knowledge. Work with them to understand their needs then find away to solve those needs without regard to the data gaps. Where possible correct the informational disparities as they are discovered

3. Ensure that there is coordination across your organization and eco-system when putting out marketing or other customer information. Everyone should be aware of any information posted for customer consumption but most especially the channels, the channel partners and the key customer touch points.

4. Shop your own company. Mystery shopping is used routinely in consumer or B to C but the same techniques are needed in B to B transactions. You would be amazed at what you would find out when you act like a customer and experience the view from their perspectives.

There is nothing really magic here but it requires the right discipline to execute effectively. You would be surprised about the number of times that customers feel that you have broken the trust that you try so hard to maintain. This loss of trust has a big impact on your potential customer equity. Ask your customers if they have ever felt deceived or lied to by your company. You might be shocked to learn the results.

That is my opinion, what is yours?

Posted in Business Strategy, Customer Experience, Net Promoter / Customer Satisfaction, Return on Innovation, Service education | Tagged , , , , , , , , , , , , , , , , | Leave a comment

Customer Experience or Customer Retention strategy?

Posted on August 16, 2011 by Doug Morse

In reading the title of this blog, many CMOs might question if this is a trick question as many view customer retention and customer experience as one and the same set of processes. Since counting the number of customers is easier than evaluating their experience and how it relates to market value, they tend to focus on retention. The real question is what is the real strategic drivers for CEO’s ? Is it creating loyal customers and creating profitable growth or trying to stop the ship from leaking?

This blog is really an open letter to the telecom / cable providers and their C suites and inspired by Bruce Temkin of the Temkin group who has been rating and comparing industries around overall customer experience and satisfaction for some time. ( http://www.temkinratings.com/temkin-ratings/temkin-experience-ratings/ ) The whole telecom / cable / Satellite TV provider sector tends to rate amongst the lowest in consumer satisfaction and experience, regardless of who is doing the survey. We would all like to hope that market forces and competition would improve the breed but the truth is the competition for these services is minimal for most consumers. As a personal example, I have cut my AT&T spend by over 90% because of how they treated me as a loyal customer but for certain services and in certain locations, I have no real choice. Each month that I have to write a check to these companies who provide such lousy customer experience just eats at my soul. It feels like paying the devil.

As we (my company) have studied these companies, both professionally as customer experience strategists and as individual consumers, we find common issues and problems. We see that CEOs like AT&T’s Randall Stephenson, Joe Clayton of Dish Networks and Ivan Seldenberg of Verizon seem to care about customers but in our opinion view them purely as dollars and cents figures to be controlled rather than trying to provide any value to equation that engenders real loyalty. Many of these companies seem to view their product as a commodity and believe that price is the main issue for their customers. Many consumers figure they all provide the same, often poor, service so they might as well go for the lowest price. The vendors do not appreciate the potential of perceived value from the customer viewpoint. What attracts and retains customer is value, not price. Value comes in many forms does not have to cost more but it does have to be tuned to market segments.

For too many of these companies service is a cost to be controlled and not an asset with which to leverage customer value. AT&T, as I have cited before in prior blogs, is designed not to listen to their customers. (Ironic for a phone company) If I had their level of complaints I might be tempted to shut off communications as well but if they did listen to their customers in a systematic way they might actually be able to reduce the noise in their system, reduce cost and retain and grow more customers.

All of this has lead me to share with you some clues and examples to tell when your company might be in trouble in terms of customer equity.

Here is clue #1 that your company might be in trouble. If you have more employees with titles or jobs that say “customer retention” in them than you have people or roles that have “customer experience” or “customer care” in their title, you have a strategic issue. It might seem like some a case of semantics but it is not. Viewing the goal as retention creates a set of measures and cultural mindset that is very different than one of viewing the customer as the people who create your paycheck. In a large B to C company a few dollars of investment in customer experience management would yield a far greater cost saving and return on investment than the same investment in customer retention programs or in cost for acquiring new customers to replace those whom you can’t retain. We see that Pat Essar, President of COX Communications, may have already figured this out. Cox actually has a focused customer experience group that must be effective as they rate near the top of their industry in terms of overall customer satisfaction, according to the Tempkin Group. While they may still just be the fastest horse in the glue factory for now, at least they have the right idea and have certainly seen the financial benefits. They do not need to be at the top of Temkin ratings they just need to be much better than the competition. With the right focus on customers they could become a game changer and not just a segment winner.

If you were to look at company websites under the “leadership team”, what roles would you see listed? In the vast majority you will not see a Chief Customer Officer or other customer focused title that reports as a part of the C-Suite. Look at the key executive functions with their descriptions and few will have any statement that their role in the organization is to focus on their largest asset, the customer base. I do have to give a small round applause to Michael White, CEO of Direct TV who lists all of their executives but in small letters underneath the list of officers shows Ellen Filipiak as Sr. VP of Customer Care. It shows some hope and at least they are willing to listen.

Clue # 2 that your company may be in trouble. How many times a day do your employees have to say “I am sorry” or “I apologize for that”? In a recent set of personal experiences with DISH Networks I heard “I apologize for that sir” so many times I wanted to scream. All I wanted to hear was “I can fix that for you” (and mean it)

I have run large global support organizations with very large global call centers. I know the drill. I know that they work with scripts but I also know that the BEST ones are the one where the employees are empowered to act and have the tools needed to resolve a customer issue. These same empowered agents also act as customer advocates and are given a voice internally to improve things. Empathy is a good thing but it sounds hollow when not followed up by concrete action. While I am at it, don’t ask the customer “can I help you with anything else today?” when you do not resolve the original problem.

Earlier this year it was announced that Delta airline was going to send all of their customer agents to “charm school” to help with their low customer satisfaction rates. (Airlines are another industry with low overall customer experience ratings but they do rate higher than the telecom sectors.) Shortly after the charm school news Delta was in another controversy over charging returning military personnel outrageous fees for their checked baggage. They were returning from WAR not a vacation. Clearly the Delta employees are so constricted by “policies” and in fear of their jobs for any exception to those policies that they wound up creating a PR nightmare for Delta, created a nightmare for the soldiers and likely felt terrible about the policies it in the first place. These were not empowered employees and no amount of charm school will change that. If you allow empowered employees to listen to your customers and to understand the customer needs and concerns you could actually fix real problems and you would not need to send agents to charm school to make them more empathetic. Not only would you save the wasted money of the charm school, you would likely find ways to reduce costs and increase overall customer satisfaction.

Clue number 3 that your company might be in trouble. Your organizational alignment is geared toward vertical silos of specialization and the only place where cross organizational decisions can be made is at the top of the hierarchy. One silo in an organization cannot be the only group with the incentives to drive customer loyalty or even retention. Everyone in the company needs to hear the voice of the customer and have the incentive act in way that has the right balance of customer value and shareholder value. The telecom industry could learn from almost every other industry. Using another tough industry as an example like the airlines again, we see that Southwest out does most of their competitors in most key measures and their customers are the happiest in the industry. Their employees are empowered to take care of customer issues. The pilots may have a specialized skill to fly planes in the safest possible way but they also know how produce a customer experience that is memorable. They do not have to bribe their customers with hidden refunds or special limited deals to retain their customers. They are organized strategically to make the sometimes painful process of air travel into a memorable experience. They do this because the organizational boundaries allow for the flow of information about customers to be used to make important decisions. It does not matter if you are a gate agent, in the operations department or a baggage handler at Southwest you know that it is a part of your role in the organization to make memorable customer experiences and to create loyal customers.

In contrast if you look at the organization structure of an AT&T they have, for various legitimate reasons, broken up the company into lines of business like landline services, internet and mobility. For functional and regulatory purposes this may all make sense if I only focused internally. I used to do a lot of business with AT&T across their various lines of business and I was a diehard loyalist. But whenever I dealt with one line of business they were not aware of my value as a customer across their lines of business. My total lifetime value was based just on the transactions with each line of business. To me, it is all one AT&T and if I have a bad experience with one group it affects my loyalty with the whole organization. This is true of many organizations that do not strategically architect their customer data to serve their organizational model. These same problems happened with financial services companies for many of the same historical reasons. These companies grew with both regulated and non-regulated business units and lines of businesses often regulated by different agencies. When they were allowed to cross sell into these different relationships the physical organizations and the organization of customer data did not follow. Organizational alignment is not about the physical hierarchies around people it is also about the organization of your processes and supporting technologies.

These first three clues are about the cultural readiness of an organization to retain and grow their customer base. These behavioral traits start with the right leadership focus on customers and setting the right vision and goals for the organization to create a greater focus on customer value. Cultural readiness needs employees to be fully engaged and bought into the vision not by words but by the actions of the leadership team and the proper investment required to empower the employees to help drive customer value. All of it needs an alignment of people, process and technology to provide structure to the customer value culture.

In a future blog, we will look at four more clues on how to embed the customer culture in ways that are cost effective and sustainable. You can increase the value of your customer base and save costs, even in a bad economy. A strategic customer centric framework will lead to greater customer growth, great profits and will help drive innovation to help you beat your completion.

We can only hope that our wired and wireless service providers start to understand that customer experience will lead to greater customer retention and we, as consumers, will benefit from companies willing to listen.

That is my opinion, what is yours?

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Delta Sends Its 11,000 Agents to Charm School ?

Posted on February 8, 2011 by Doug Morse

Delta Airlines Ranked Last Among Major Carriers in Customer Service, So Training Targets Problem-Solving and Personal Skills.

Delta sends 11,000 agents to charm school was an article from the Wall Street Journal, Thursday Feb 3rd by SCOTT MCCARTNEY. http://online.wsj.com/article/SB10001424052748704775604576120080627254652.html?mod=ITP_personaljournal_2
I do not know whether I should laugh or cry about this. I see this way too often where a company is having so many internal problems and lacks good leadership that the frontline service people get hammered by customers. The front line staff develops an attitude or a defense mechanism to cope with the inherent problems. NOBODY likes getting yelled at for things that they can’t control.

The irony here is that most people who go into customer service jobs are afflicted by what I call the “defective customer gene”. It is in our DNA to actually want to service our customers and getting criticized everyday by complete strangers is something we actually enjoy. Not because good customer service agents are masochists but because they view these moments as opportunities to turn something bad into a memorable moment that will increase customer loyalty and satisfaction. Turning around a bad situation is rewarding at many levels.

At Arizona State University’s Center for Services Leadership; they have done a lot of research around ‘Service Recovery’. These studies, and others like them, have shown the importance of being able to effectively turn around customers in the event of a service failure. No service is going to be perfect no matter how hard you try. You strive for the best but plan for the worst. An important part of this research concluded that customers who have experienced a service failure but then are treated appropriately in the recovery for that failure will be much more loyal to your brand than even those who never experienced a problem. The recovery might be simple as an apology with appropriate empathy or it might be appropriate compensation for the problem. Even doctors can drastically reduce medical malpractice claims by admitting to the error and treating the patient and family with appropriate respect and effort to resolve the issue. Service recovery must be timely, it must be sincere and it must be appropriate and proportionate in relation to the customer impact.

It is too easy to blame the customer facing agents for bad customer service. I can guarantee that the 11000 agents at Delta are NOT the cause of their poor customer service ranking. If Delta resolved the root causes like bad scheduling, poor maintenance and bad baggage handling they would not need 11000 agents nor would they need to send them all to charm school. These agents likely got their jobs because they were already charming, their management made them otherwise. They are likely no longer engaged in Delta’s success and lack real empowerment to help make the right changes.

I have seen this at way too many companies where the front line service is surely and unhelpful. These people will look beaten and defeated. They have given up trying to change things they can no longer control. They gave up apologizing for their employer because the problems never get better and so customers view the apologies as insincere. When they lack empowerment and they are no longer engaged they become automatons. Sending them to charm school or replacing them won’t help.

Customer Service is a team sport and everyone from the CEO to lowest paid employee needs to feel a part of the team that creates good customer experience. Southwest is in the same business yet they are profitable and have a loyal customer base. You can tell from the way that the Southwest employees act that they are engaged and as committed as the CEO.

Helping frontline employees to become better ‘actors’ through training them on personal communication styles, negotiating, crisis management and human psychology and the like is a great idea. This is especially true if you want to create certain brand experiences. Ritz Carlton trains their people to act and respond in certain ways consistent with designed brand experience. It would not work if there was not an infrastructure behind them to support that brand experience. In Delta’s case they are wasting money until they have a good handle on the rest of their problems.

Delta, don’t blame the messengers in your company and spend your money where it will make a REAL difference to customers. If I can’t get to my destination, safely, with my luggage at a competitive price on time then no apology from a cheerful agent is going to want to make me fly your airline. Fix your operations then getting 11000 agents to become brand ambassadors will be much easier. Start at the other end of the company, fix that first and you will see much better returns on your investments.
That is my opinion, what is yours?

Doug Morse is Founder and Managing Principal of the Services Transformation and Innovation Group LLC. He is a leading expert on creating brand value through customer centered business strategies with over 30 years of experience in companies like IBM, Oracle, Autodesk and Tyco. www.servtrans.com

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Why don’t customers matter to CEO’s?

Posted on February 4, 2011 by Doug Morse

Why don’t CEO’s focus more on their customers? Ask any CEO if customers are important and they will (or should) always answer YES, very important. If you asked them how much of their organization, their time or their strategy is focused on the customer the truthful answers will likely show a different story. It is possible that they even believe that the customer is already everyone’s business or responsibility in their company but likely you will find that there is no single point of accountability for the customer experience or loyalty. They have a CIO, a COO, perhaps a CMO (Chief Marketing Officer ) but is there a Chief Customer Officer? The executive team will generally have a good focus on internal operations but no consolidated view of their customers. While this condition may not represent 100% of the companies that we see, it is unfortunately still the majority.

Traditional companies are built around a model of operations that was largely defined by the coming of the industrial age and a set of principals set forth by Adam Smith in the 18th century! We have come along way in 200+ years. The global economy is driven by service and not manufacturing in today’s world. The “The Wealth of Nations” (also the name of Adam Smith’s book) today comes from a growing service economy. It is also no secret that when most of today’s business leaders went to school and got their MBAs, service was not a part of the curriculum and certainly there was no course to teach them about Customer Experience as a discipline or a science. Even worse, if universites did have classes about Customer Experience, what would they teach? Ask a dozen or so people what Customer Experience means and you will likely get more than a dozen answers and not all of them are wrong. The good news is that people likely have heard the term and at lease have an opinion about the meaning.

Customer Experience as a business process has been around for ahwile, particularly in the consumer and hospitality space. Businesses like Disney, Starbucks or Ritz Carlton have made this a science but in the Business to Business ( B to B) domain it remains virtually non-existent. The definition of what customer experience is remains subjective. How the term is used in hospitality is very different from a bank or technology company. In my company we think that Customer Experience is a good proxy for customer value strategies. It not about products and services or customer focused solutions; it is about participating in mutual value creation.

In our research we have found that Customer Experience is used to describe 3 broad categories of work or processes. When working with clients we can expect to find that their primary focus around Customer Experience falls into one of three categories. We have seen very few who look more broadly and describe their CE activities as encompassing all three of these categories.

The first category is one that we see a lot of around the financial services sector and most often ties into CRM related projects. In the financial services sector we often see CRM and Customer Experience terms and initiatives being used interchangeably. In this category we see people wanting to do better customer segmentation, defining the lifetime of value of a customer , trying to personalize the experiences with technology and the gathering of customer intelligence for marketing purposes. The programs tend to be more internally focused. It is more about customer data management and less about customer success.

The second key category is what we call “voice of the customer” activities. This is about customer listening, understanding customer wants and needs and what the customer views as their requirements in order for them to be more successful in their markets. It is about looking to gather new ideas for innovation and understanding the customer’s view of the brand through direct and indirect channels like, social media and secret shopping.

Voice of the Customer also covers both active and passive listening. Active listening might be done through surveys or other direct research. Passive listening is about collecting the customer input at every touch point and then doing constant analysis of the data. This includes all of the social meda channels and places where a customer might ‘talk’ about your company outside of your formal channels

The third area is about creating a designed customer experience. This is about designing the brand experience and the physical or emotional experiences that will engender loyal customers or drive customer behavior. This is the most advanced area in terms of deep research and core expertise in the industry today. Disney has the Disney Institute to teach others about how to design and enable a guest experience. IDEO is a company focused around innovation and creative design around the experience economy. While the science can be applied to the B to B arena it is most often focused on consumer and hospitality based businesses.

Most established companies will have one or more customer experience programs going on even if it just customer satisfaction surveys. In most cases these disparate programs are being run by customer advocates lower in the organization. Those customer advocates often feel like Sisyphus trying to push rocks uphill. In this case those “rocks” are customer focused programs trying to reach the C-suite with critical data. Unfortunately the C-suite is not directly rewarded or incentivized to focus on customer based metrics. It is not that CEO’s don’t care about customers; it is just that they do not invest enough time, resources or energy to optimize the brand value that can be created through strategic customer experience programs. Given today’s challenges in corporate governance the CEO may not physically be able to put as much focus on the customers as they would like but this is no excuse. This is why a Chief Customer Officer might be needed.

So why don’t customers matter to CEOs? The first reason is that they have not connected the traditional measure of financial success back to the customer programs that drive those results. Second, they were typically not trained or educated in the new service economy. Third, they have not experienced the disasters that can happen when you do not listen to your customers but the new competition does. Companies that are deaf to their customers will be constant crisis mode. Complacency kills good companies.

It is never too late to become a better company. You need to have the leadership that understands the relationship between customer value and your company success. You need the right organizational alignment to remove the silo based mentalities that inhibit customer innovation. You need to re-think and re-tool your information systems to focus on the eco-systems that support your customer’s success. Your customers need to be engaged in your planning and business processes. You need your employees and partners to be engaged in driving customer success. Your brand value will increase as your customers become more successful. Focusing on how to make your customers and partners successful will lead to the financial rewards that should make ANY CEO understand why customers matter.

That is my opinion, what is yours?

Doug Morse is Founder and Managing Principal of the Services Transformation and Innovation Group LLC. He is a leading expert on creating brand value through customer centered business strategies with over 30 years of experience in companies like IBM, Oracle, Autodesk and Tyco.

www.servtrans.com
All rights reserved 2011

Posted in Business Strategy, Customer Experience, Net Promoter / Customer Satisfaction, Return on Innovation, Uncategorized | Tagged , , , , , , , , , | Leave a comment

COMCAST on the Wall of Shame- 2011 !

Posted on January 18, 2011 by Doug Morse

COMCAST is NOT as COMTASTIC, as their ads would like you to believe. COMCAST has recently been advertising their improved customer service and in truth, I have experienced a friendlier attitude. Unlike AT&T who chooses not to listen to their customer or improve customer experience, COMCAST understood that this was a weakness and an area of customer concern. Clearly their reputation in the social media had an impact.

So why is COMCAST on our Wall of Shame? While they have dramatically improved the customer interface at the front line level, their back office operations are not aligned for overall good customer experience. This is a lesson that all companies should learn. If you want to transform the company to drive brand loyalty through a customer experience or customer centric strategies it is not just about the front line people. Chances are they always cared about customers but Customer Experience is a TEAM sport. The back office and operations has to be involved or the front line just winds up apologizing all the time.

Like all consumers we have good and bad service experiences every day. As any Customer Experience or Service professional will do, I tend to examine both good and bad experiences to understand the origins. Our company has researched hundreds of companies and has concluded that there are key factors that make a company successful or not when it comes to creating shareholder value while creating Customer value or great customer experience. These are:

• Leadership – The CEO needs to walk the talk and create the right culture
• Organizational Alignment – You need to align organizations around what the customers care about not what bean counter care about.
• Technology – the line between front office systems and back office systems has disappeared, it all affects ,and is visible to, the customer
• Metrics for success – Customer Experience or loyalty metrics are everyone’s business, not just customer facing people. Measure your value as your customers measures your value to them.
• Customer Engagement – This is a key strategy that needs a thoughtful and complete design that incorporates ALL levels and departments of the company. This design must match your vision and strategy.
• Culture – Develop it, hire for it , build systems around it, vision without a supporting culture is doomed to fail
• Operations- External and partner operations are as important as internal operations. Operate as well outside your four walls as you do inside.
• HR – You need the right people with the right skills and the right incentives who are all clear on their role in the grand objective.

Here is my personal story. I had a chance encounter with COMCAST. I did not choose COMCAST, they bought out the cable internet provider I did choose. After years of flawless high speed service, suddenly I had outages that required COMCAST to reset my modem,remotely. However when they reset the modem the speed of the system was reduced, even though my bill had not. Tech support could only tell me that I had supposedly downgraded my service and I would have to pay an upgrade charge to get back what I had lost.( or had been taken from me )I had not authorized any such downgrade. COMCAST did this internally as they absorbed the old company. Suddenly I was on a new plan that I knew nothing about. Even though my speed was cut 75% it was still good enough. But wait, there is MORE….another suspicious outage a month later and my speed is reduced by another 65%! Why? Because the previous service level offering (that I never signed up for ) was no long available …after one month. My next bill showed 10% reduction in the base price but I was now 10X slower than I had been 2 months prior! ALL of this is done without notification or my permission. Given proper notification and or option choices, which might have include paying for an upgrade fee, I would have felt better. Instead I feel violated. In 3 years my rate has gone up 75% and my speed has been reduced by 90%, and all done in stealth mode.

The insult to injury comes when you speak to the customer service rep. They are very professional, well trained but have at their finger tips a one sided view of their customer. Essentially when I try to explain my story, I am treated as if I am lying to them. I am told that I am WRONG because their systems show X,Yor Z. Escalating the issue finally gets someone who can understand what happened and is at least sympathetic. In the end I am still paying more for less service. How this was handled in the back office, change of policy, change of ownership, change of offerings etc. leaves the poor front line to deal with higher call volumes of people complaining. There is much more that goes into the background here, but for the systemic failures within COMCAST they have to go to the Wall of Shame.

Another core error for COMCAST is that their view of me as a customer is programmatic. This comes from poor marketing experts who look at internal metrics instead of external factors. They only view me for what I have purchased from them to date and not what I am likely to purchase from them. To them I do not show a good life time value as a customer because I only buy internet service. I did not buy bundles which is what they are incented to sell. What they do not know is that most of my neighbors, and many friends or business associates became COMCAST customers because I had enjoyed good service, at least in my area. They do not know that I pay for multiple providers of telecom / entertainment services at multiple locations. At the time I engaged these providers, it was not an option to bundle all of these services into one provider. I have reduced my total spend with AT&T about 75% because they do not treat their customers with respect. I was going to consolidate a lot of my personal and business spend with COMCAST to take advantage of their fiber backbone networks and bundled offerings. This is 100% the truth as I was just waiting to upgrade some technology before making the switch.

So, welcome COMCAST to the WALL of SHAME for their bad customer experience. They have lost my trust and loyalty. They have lost my future business and recommendations. This is NOT meant to be a bashing for COMCAST, there are a lot of companies of the Wall of Shame who forget that they exist because their customers ALLOW them to exist. I use COMCAST in this blog as an example. There is much more behind of this story but the take away is that Service and Customer Experience is not just a group or a department. If you are serious about acquiring and retaining customers then it is an enterprise wide strategy and team sport. I do give credit to COMCAST for serious improvements in their front line service staff and operations, they are trying to improve, they are just not there YET!

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Services Innovation and Education

Posted on September 22, 2010 by Doug Morse

reprised from a presentation to the National Acadamy of Engineering and National Science Foundation ,2006 Washington DC. an open letter.

Why is services education and innovation important to high tech services organizations? Few companies can survive the future without these subjects being a key part of their strategic plans. Few economies can thrive without the infrastructure, investment and support of these strategic initiatives.

Setting aside nationalistic interests for the moment we are facing several frightening scenarios in high tech services globally. First are the increasing demands to deliver high value, labor-intensive solutions and services to our customers but at a much lower cost. Second, the skills required to deliver the solutions and to lead the organizations that deliver this customer value are in decline. Third, the solution for both of the previous scenarios lies in driving innovation / automation for which there are few incentives in private equity or government funding nor does the industry have the capability to sustain the long term investments required.

The first scenario is driving behavior that yields short-term results and long term concerns. The most often used tactic is to move direct labor to more cost effective labor markets thereby driving national investments in developing nations to fill this labor need. This is no longer about buying commodity based skills, but about lower cost for highly skilled workers educated and able to provide “mass customization” for their clients. The short-term tactics are masking the critical needs, especially in the US.

The decline in skills and leadership to drive a services economy is perhaps the scariest in the US. Like most other skilled professions we used to have a plethora of companies, trade unions, trade schools etc that once grew skilled professionals organically. IBM, DEC, HP, AMDAHL, for example, all had programs to develop long term services professionals where people could learn the trade craft via on the job training. Companies had to train the workforce because no one graduated from school and entered the workforce with the required services skills. Those companies that still exist can no longer afford the time and expense to grow the services skills organically. The complexities in most of the services industries are driving companies to seek college graduates, often with higher-level degrees to fill entry-level positions. Sadly, Starbucks likely trains better service people than does Harvard, Stanford or MIT.

Today the Services executive leadership in most high tech companies originally came from these old world training grounds like IBM, DEC, etc. Given the trends in the workforce towards retirement of these leaders, from where will the next generation of leadership come? Where will they learn their specialized craft? How will we adapt new leadership to new technologies, new ways of social networking and communication standards?

The solutions are not simple but more alarming is the fact that the drivers and infrastructure to create innovation, automation or education are not in place. Services, by in large, is not an industry in of itself. It is a part of every other recognized industry. As a result of this fundamental lack of recognition the representation of its needs to capital markets, governments and, academia is fractured and inconsistent. No one voice speaks loud enough and yet billions of dollars and millions of jobs are at stake.

Where will services education and innovation come from? The economy clearly needs it, businesses can’t live with out it, Universities are teaching around it and technologies are invented everyday that support it. If we need it and if we have the core building blocks, how do we accelerate the pace of change before real damage is done to our business and economy?

As services professionals, it used to be customer problems that kept us awake at night worrying. Today, it is wondering how we will survive if we do not tackle these scary issues on national and international levels.

Those are my thoughts, what are yours?

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Designed Not to Listen

Posted on August 20, 2010 by Doug Morse

I have written in past blogs about companies that exhibit poor customer service and the need to call these companies out. I have also written that there too many companies that have a customer care department but they do not have a customer oriented culture and hence pay only lip service to the care of their customers. Today I wish to call out an even more insidious creature; it is the company that cares so little for their customers that they are designed not to listen.

Emily Yeltsin wrote a book called “Your call is just not that important to us”. She wrote of bad call center experiences and how they fail to treat customers like they are valued customers. I have studied many of these companies and there are many common factors that drive this behavior. These uncaring companies have bad organizational designs and false incentives that create this environment. By false incentives, I mean that companies’ value perceived efficiency over customer loyalty. This is the mistaken belief that what customers care about most is the lowest price and not real value.

These stories about bad service are not new. Recently I have been observing a new and growing trend that really disturbs me as customer experience professional. These are companies who are so poor at servicing their customer base that they cannot keep up with addressing the evil that they have wrought upon their customers. In this case, they have designed the system such that they give you bad service then make it impossible to complain, assuming that you care enough to want to help them improve through constructive feedback.

Most recently I experienced a personal example with AT&T. that brought this point home. While I have to confess that AT&T has made me a disloyal and disgruntled personal and business customer, they are not the sole offenders here. However AT&T has so disappointed me that my current goal is to eliminate as much business as possible with AT&T, even if that means taking added risk in terms of technology. Since telecom is one of my largest expenditures, this is not an insignificant amount.

Every company, no matter how customer focused they might be, is subject to service failures and everyone has horror stories about companies who actually do really care about customers. When companies do have failures and then do not have the fortitude to listen to customer complaints, it is time to move on. After all, a customer complaint should be viewed as a free gift to the company. The fact that the customer wishes to share the complaint is the customer’s way of saying that they care about the relationship and want it to improve. When they do not care, they just quietly go away.

AT&T is a good case study. They, like many companies, are comprised of various business silos. For example, your land line, wireless technology, internet and TV may all be a part of the AT&T enterprise, but the overall company does not view you as one customer. Each business line treats you as a separate transaction or customer. Even within a line of business, each interaction may be recorded with a different group and not shared with others in the same organization. Similarly, if you can reach a real person to voice your complaint, that information is not shared across the organization. They do not value the total relationship of a customer, they only value unique transactions.

In AT&T’s case trying to find the right customer care group or to find a phone number, email or web site to use for a customer service complaint is nearly impossible. They do provide forms for reporting a problem but these forms are designed to accept only limited input based on the checking of a series of categorization questions. These forms are built for THEIR internal use to route the problem in order to make themselves more efficient. They do not give you the ability to escalate issues, bring things to management’s attention or to deal with abnormal situations that may be cross functional or not previously categorized. For the most part, you will never receive a real response to any of these forms requesting help. For example AT&T’s internet and voice service may come over the same wires to your house or business, but the organizations that service them are divided between voice and data support organizations. These groups seldom share data about customer issues, configurations etc.

AT&T, like many companies, is focused on the internal measures of product lines and not things like lifetime value of a customer. Not one person ever asked me why I was canceling an AT&T service and switching numbers to another vendor or why they were losing my business. They have designed their systems to drive costs out of the operating and service side of their business and do not seem to care about the value of retained customers. They have made it difficult to contact them over non technical problems because they know how many contacts they generate and do not wish to deal with the “noise” of customer gripes, legitimate or not. They have optimized on themselves and not the customer experience. They have been designed NOT to listen to their customers.

When you can contact someone at these companies, they may show empathy but another characteristic of these non-customer focused companies is the lack of empowerment of the front line staff. These are the folks who quote you the “rules” or standard operating procedures or who can only follow a scripted process but do not really help. Ever been transferred 3 times only to have repeated your statements each time? Ever been transferred 3 times only to get to the wrong department? (who, by the way, seem to be incapable of finding a supervisor) When was the last time you were asked by these companies to proactively provide them feedback on their service? These companies are designed not to listen.

When companies are designed not to listen to their customers the negative feedback may actually go viral via the internet. Web sites like UNTIED.COM or DELL HELL or YELP.COM become a danger to the brand value of companies. Not only is dirty laundry aired in public but false accusations may also be a part of the social media. If you do not listen broadly to customers, it will come back to haunt you.

Companies need to rethink how they listen to their customers. It is not about just having happy customer metrics; it is about creating value for customers that will be rewarded by loyal customers. It is not about seeking complaints or complements, it is about how to improve your business, detect trends and getting ahead of problems. Listening to customer will provide valuable input to innovation within your company. Those companies who are designed not to listen to their customers are designing themselves to FAIL.

That is my opinion, what is your?

Posted in Customer Experience, Net Promoter / Customer Satisfaction, Return on Innovation, Service Innovation, Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

To BLOG or Not to BLOG that is the question today.

Posted on August 10, 2010 by Doug Morse

Well for me the term BLOG might just stand for ‘backlog’ as I have been remiss in keeping everyone educated and entertained. Just to warn you, I plan to catch up and make up for the last six months of no new news. I have no other excuse other than I was extremely busy, which as a consultant, is not a bad thing. As I would advise any client, it is no excuse to neglect one part of your business while working on other parts.
To tempt the readership back I want to preview some upcoming topics that will be published shortly. In coming blogs we will cover the globe and catch up on some recent interesting work that we have done in China and Europe. Here is short list of upcoming topic areas.

• Shift from Manufacturing to Services outside of the USA
• Innovation opportunities in Greater China Markets
• Why China is not going to take over the business world, yet.
• Strategic Planning and the role of Innovation
• Return on Innovation, How are you measuring it?
• Service Culture, global differences
• Wall of shame, are companies designed NOT to listen to their customers?
• Customer Centered Innovation – Relationship Counts
• Customer Experience – Does it need a new term?
• Value of Customer Relationships
• Complex Service Systems and the Information Nexus
• Value is being redefined in business today – A new value chain

That list should keep me busy during the summer doldrums. But I wanted to leave with one memorable moment that came from a conference in China. The following quote, attributed to ancient Chinese philosophy, spoke volumes to me. I hope that it causes you to think about how we need to support education and new ways to teaching students in the USA and around the global village in which we live today. Here it is:

“If you wish to plan for 1 year, sow Rice. If you wish to plan for a decade, plant a tree. If you wish to plan for a LIFETIME, educate people! “

I hope to be a part of the education of people with this blog.

That is my opinion, what is yours?

Posted in Academia, Customer Experience, Return on Innovation, Service Innovation, Service Science, Service conference, Service education, Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

Why Running is Like Running a Services Business

Posted on August 10, 2010 by Doug Morse

An epiphany hit me the other day while I was out running. These flashes of brilliance happen from time to time, likely due to lack of oxygen getting to my brain. As a result I do not always write about them until I have thought about them while sitting down and regaining my senses. Here is the profound thought that came to me in my oxygen deprived state. At some point in my life running for exercise went from being a health benefit to becoming a health risk. I realized that there might be parallel between this problem of running for health and a service organization’s ability to stay healthy.

First, product related service businesses, like running, are not something that one can do well from day one. It takes time to train and build up muscles, heart and lungs to run a marathon. Most product related service organization (particularly in technology sectors) evolved over time and did not start out optimized to run as a profit center. They mostly started as cost centers in support of the product warranty. Eventually these service groups evolved into their own profit centers with a greater range of services. Once they have reached the “for profit “stage in most companies things feel good. Like a person running for health reasons, the profits from service are adding to health of the overall company. This evolution is like training to run long distance; it is easy to get complacent and to ignore warning signs. Yes, something hurts when you do a long run, but you ignore it, work through the pain and you rationalize it as part of the process. Profitable service organizations also ignore warning signs. Customer satisfaction dips, backlog grows but you ignore it, work harder, and you rationalize the metrics.

A recent report from the TSIA (Technical Services Industry Association, formerly SSPA ) showed how most technology related product companies are benefiting from a significant portion of their revenue and profits coming from service. In fact, most companies with a service annuity stream will eventually see service revenues exceed sales revenues. Again, like a well trained runner, this can mean that you can go the distance easily or, like a runner, the service businesses can hit a wall where things are not so healthy anymore. It is difficult to imagine that increasing profitable annuity streams is a bad thing but even if it feels good you need to be aware that this good feeling only lasts so long. A runner’s high after a long run lasts until the pain sets in.

For the most part we can call the wall ‘complacency’. If you do not stop and evaluate your physical condition as a runner or athlete, time (age) can sneak up on you often with dire consequences. It starts with simple aches and pains but can end with more complex health problems. One could argue that complacency can kill any company but it is especially vile in the service industry because the warning signs are more subtle. When the profits are good and customer satisfaction is high it is hard to believe that you might be on your way to a fatal crash. So, what are the signs of pending problems in service businesses and are they predictable?

There are many signs of pending disaster. The obvious ones are things that we might see operationally in our metrics. Less obvious is that we might see competition entering into what was a closed market now offering new ideas or niche services surrounding our service. This means that you are no longer fully serving the needs of your customer, something has changed. We might see customers being slow to pay their bills or negotiating harder at renewal time for discounts. Sales teams may want to discount or give away service to make deals. These are all signs that the value of the service has declined in the eyes of the customer and yet all operational metrics are still on the upswing. It is a sure sign of not actively listening to the customer base.

A runner might not invest in new shoes often enough or stretch properly because they are feeling good and this lack of investment can lead to more wear and tear on the body. If things are going well for a service organization and profits are up, revenues are good then a company might ignore funding R&D or focusing on service innovation until it is too late. We have observed companies with service organizations that enjoy greater than 90% margins trying to starve the organization for even greater profit margins rather than invest in training, innovation, customer listening programs or other foundational investments. As with many things, it is not the one big thing that hurts you, it may just be death by a thousand little cuts. Each little thing is not significant, but overtime it adds up to become a major crisis.

An athlete’s performance is governed by an eco-system. Things like the amount of sleep, stress, types of food and amounts of water can drastically alter performance on a given day and impact future health. Similarly the eco-system surrounding a service organization can affect performance. Having an ability to measure and control the eco-systems is just as important as the internal performance metrics. Things like quality of the relationship with your customers, understanding changing needs in their industry or segment and monitoring the reputation that you have based in the social media may give you leading indicators.
Proprietary hardware vendors saw their lucrative after market services diminish when third party vendors came in with a new value proposition. Technology companies have seen their market advantage vanish as service providers showed that they could deliver the same business results through a different or innovative delivery method. Software as a service is an example of this. Google has defined an entirely new advertising space that has decimated many older forms of advertising services.

Just as older athletes need to pay greater attention to their bodies as they age and may need to set new benchmarks for themselves, so it goes with companies. Being trained to do one thing well may limit your vision to future or changing possibilities. Likewise, a company’s past success does not ensure future results if they become complacent and ignore the need to invest in innovation. Companies should think about how they can recognize the warning signs when their training and past success indicators are no longer working towards their economic health, but are instead working against their future viability.
Investing in innovation is not an option and failure to innovate will lead to, well… failure. Recently we read Clayton Christensen’s “The Innovator’s Dilemma “. Since good companies DO fail, perhaps this is good time to read this book or listen to the book next time you are our running to get healthy. Exercise the mind as well as the body.

That is my opinion, what is yours?

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