02.24.09
Posted in Service Innovation at 8:08 pm by Doug Morse
Take advantage of the down economy
How can you take advantage of a down economy to get ahead of your competition? I am sure that there are books written on the subject but let me give you my view.
First is a personal challenge. For me continuous learning and personal growth is a lifelong objective. When times are going well and life is hectic it is easy to put aside the opportunities to gain new skills or education. However, it is the slow or down times when that learning might become critical to your success. Your versatility and your skills will differentiate you in the market. You should certainly be more valuable to your current or future employers.
I have written about Arizona State University and the unique Center for Services Leadership at the W.P. Carey Business School many times in the past. They are the leaders in educating both future and current service professionals in my opinion. (and the opinions of many others ). Each year, they not only teach pre and post graduate students, they also teach service practitioners and active professionals through a number of programs. Two of the key programs are the Services Leadership Institute, a mini-MBA program and the Competes Through Service Symposium.
The Service Leadership Institute is held in March, typically. This year it is March 9-11 in Phoenix. This program is limited as to the number of students that can be enrolled. This is the 23rd year for the offering and in most years the course is sold out months ahead of time. The prior attendees and their companies along with the Center’s member companies tend to get in early, leaving few seats open. Unfortunately for the world economy, but fortunately for you, this year there are a few seats still open. If you want to take advantage, you had better do this today. ( wpcarey.asu.edu/institute ) While I understand that companies have restricted travel and training, these short sighted principles of others provide you with a unique opportunity to get ahead of your competition.
The second way to take advantage of the slowdown is for companies to rededicate resources into innovation. Innovation can take many forms. There can be incremental innovation, disruptive innovation, product innovation, process innovation and, my personal favorite, service innovation. For product innovation I would recommend reading Geoffrey Moore’s book, “Dealing with Darwin”. Geoffrey is one of my favorite business book authors because he makes so much sense and synthesizes complex issues into something simple and actionable. Another recommendation on the book front is “Blue Ocean Strategy” by W.Chan kim and Renee Mauborgne. These will both help with thinking about innovation.
Innovation does not come from just reading a good book . It is a strategic process. It is in fact a core competency required for companies to survive long term. Unfortunately it is not a core competency in many companies. Those that are good at it, tend to be good at product innovation which is a well defined process in the industrial economy. Process and service innovation is not nearly as well defined or as well practiced. If you want to see some example companies that are more skilled at this, look at IBM, Accenture and Xerox who have learned to survive through research and enabling both incremental and disruptive innovations.
The time is right to spend more time on service innovation. Service innovation starts with understanding your customers and your customer’s measure of success. This process of focusing on you customer and your customer’s experience is key to surviving the recession and positioning your company to beat the competition when we turn to a growth economy again. It serves two main purposes. During the recession, retaining customers is also key to your survival. It will cost 10 times more to acquire new customers than it will to retain and grow your existing customer base. Developing deeper relationships with your customer will also help you understand their needs (not just wants ) and provide you with the data needed to create service innovation. After the recession, the expanded relationships will help with revenue growth in two ways. First, your customers will value the expanded relationship and partnership that you gain in the slow times. You helped them when times were tough, they will remember you. Secondly, using the gain in customer intimacy that you were afforded in the slower times to create new innovations will give you a head start over the competition whot just played like a turtle and retracted to hide in their safe little shell.
Stay tuned, to hear more about training and education in service innovation or contact me or my company to hear more.
How will YOU take advantage of a down economy?
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02.11.09
Posted in Customer Experience at 12:42 am by Doug Morse
The Top Ten Reasons your company might be in trouble…
Welcome to 2009. With a little tongue in cheek, I wanted to present the top 10 ways to tell that you are not a leader in your market. In today’s challenging times it is time to take stock of your company and make hard decisions to help with your survival and future success. Given that the world economy is being driven by service economics; companies need to rethink their business models and how they deliver customer value. Leaders in all industries deliver value in, or through, a services context. We use these same basic principles as a quick diagnostic for our clients.
10. You focus on product sales and not on customer value. If you just measure and reward around how much product that you sold last quarter or last year and you don’t maximize the value of those products for your customer, you won’t have a lot of repeat business. The scorecard for your company must focus on things like Time to Value, Customer Loyalty etc.
9. Services profits are used to fund product R&D but you have no Services R&D function. Innovation is important to product companies. If the products need to be innovative why aren’t the services that surround them? If close to half of your revenue and profit comes from after sales or value added services, how can you not leverage investments in innovation to include Service?
8. You still have a department or separate organization called “service” or “support”. Not only do you have a standalone silo within your enterprise but you make the customers painfully aware of the separation. Quite likely the service organizations are operating with differing and often conflicting metrics than the rest of the enterprise. Driving customer value and customer experience requires that an enterprise works holistically and seamlessly for the benefit of the customer.
7. Your CEO says, and believes, that the services revenue and profit would not exist without the products. Don’t bother to memorize the CEO’s name; I am sure that his replacement will be much better. There are famous CEOs who actually believe that service would not exist without innovative products. The SONY walkman was a very innovative product but people are buying IPODs today by the millions. WHY? Product innovation alone does not deliver value. This is another example of Darwin being right…
6. Service Innovation, to you, means disintermediation of tasks (like self service ) or by cutting heads and moving them to Timbuktu. Labor arbitrage is not innovation. Labor arbitrage is a management technique to hide problems through “cost” reductions. No one creates innovation by moving the same old work to new and cheaper labor markets. Transferring tasks that you used to perform to customers as a way for you to save money is also not innovation. Replacing bank tellers with ATMs and forcing the customers to use them to avoid long lines did not add value. Providing access to banking services 24×7 did.
5. Only the services or customer facing groups are measured by “customer satisfaction” Many companies survey their customers but only a few employees are held accountable. How a customer feels about your product or company and their desire to continue doing business with you is a result of the sum total of all experiences that they have with you. Everyone from the CEO to the Janitor must be held accountable for customer delight. Everyone has a role. If a role in your company does not contribute to customer delight, get rid of it as it adds no value. Once people start to understand their role in delighting customers, you would be surprised with the turnaround of a company.
4. There is no organization in your company that has the title of ‘Customer Experience’. Go read a book called the “Chief Customer Officer” by Jeanne Bliss. While point number 5 says everyone contributes to customer experience, who do you have that helps to design, create or innovate around customer experience? Customer experience is a complex set of issues and should involve a number of specific disciplines. You might have the best products in the world, you might have top notch services supporting the product and perhaps adding great value, but experience is an emotional state created over time. One bad event erases all the positive ones. This needs to be a core competence in your company.
3. You are expected to deliver improved margins on services even though the product quality is not being forced to improve. The product group believes that time to market is the number one goal but the service manager is expected to reduce costs as the volume service problems go up. This never happens, right? Alignment of the enterprise is key. Organizations cannot survive with competing objectives. No soccer (football) team ever won a game by having everyone on the field focused offensively on scoring a goal and leaving the goalie as the only person on defense. Winning the game means the right balance of offense and defense is used. Why would it be different in a corporate environment?
2. You have never invited your customer to participate in your strategic planning sessions. If your goal is to deliver customer value, how can you plan without customers participating? If service is about value co-creation, as it is often defined, how do you do it without the customer as a major player? While I do not mean this in the literal sense of having customer dictate how you operate your business, how do you know that what you are planning to do is going to deliver expected value? Companies that are well plugged into their customer’s value chains are leading in their markets.
DRUM ROLL HERE….and the number one reason…..
1. Even though services brings in more than 50% of total company revenue and a most of the profit of the company the head service does not report to the CEO. Service revenues and profits are major contributors to most companies’ financial success. The long term relationship with customer generally falls into the hands of the service teams. Even if you don’t appreciate the strategic nature of being service oriented enterprise, how can such an important role in the enterprise NOT report the head of the company? The SSPA /TPSA looked at the top technology companies in the world. In spite of being the leading technology innovators, these companies enjoyed 40-50% of their revenue streams from the services business. This highly profitable and annuitized money maker is not a key part of the C-Suite in most companies. When CEO’s get this right, buy company’s stock!
Ok, so sort of long for a “blog” but I thought that I would share some snippets of what I am working on. If I used TWITTER regularly it would always say “ Working on Customer Experience” . The enterprise of tomorrow will have to live in a services economy defined by delivering new customer value. If you aren’t thinking of some of these top ten issues today, well…. You do have time to create new set New Year’s resolutions!
Let me know what you think!
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02.10.09
Posted in Customer Experience, Uncategorized at 11:40 pm by Doug Morse
Customer Experience Wall of Fame or Wall of Shame…
Let’s name names. If we are honest, when we have a good customer experience we want to tell our friends. When we have a bad experience we want to tell everyone; strangers on the street, neighbors that you never speak too and even that homeless person out in front of your Starbucks. You even give the homeless guy a dollar just to listen to your story when you are mad. There are many studies that talk about how few people we tend to tell about our good experiences but also that we tell so many more about the bad experience. Research from Arizona State University, Center for Service Leadership, (http://wpcarey.asu.edu/csl/index.cfm ) has shown how important the word of mouth is to your company. They also have shown the results from the explosion of the social media sites etc. that have changed the issue of ‘word of mouth’ to ‘word of the WEB’. Instead of telling a handful of friends we can now tell millions worldwide.
Customer experience continues to be one of the focal areas in the sciences of service. The reputation, the brand image and culture of the organization are all intentionally designed to be what they are. Few companies set out to be bad at creating customer experience. So many companies do not recognize when the actual experiences that they intended or designed somehow transforms into something completely different. Even worse, once the experience does go awry they have no plan on how to recover the customer. Not only do you want to be sure that your former customer does not become your enemy, you actually have a chance to create a valuable asset. Studies of service recovery have shown how by executing appropriate recovery methods, a disgruntled customer could actually be more loyal and have more lifetime value, in terms of repeat business, than one who has not experienced a service failure at all.
Deploying customer surveys is not enough. You have to actively listen to your customers. By active, I mean, you have to not only reach out to them and give them the opportunity to comment but you also need to search for blogs, websites, and customer forums where your customers might be discussing your brand of which you were not aware. I recently heard a great story from the CEO of Charles Schwab at the Net Promoter Conference in San Francisco. When he first got the job one of the first things he did was to personally contact 100 unhappy or former customers and 100 of the employees who had quit the company. You can imagine the wealth of information that he got by listening to them. More importantly, this treasure trove of real live experiences translated into real action. It is important to remember, NEVER ask customers their opinions if you never intend to ACT upon them.
Let me share two experiences that I have had as a customer. First is with HOME DEPOT. When this company first opened near me, I loved them. They hired ex contractors or trades people who could give you great advice and recommendations. Help was not hard to find and the choices of merchandise at reasonable prices were good. For some reason they then fell off the customer cliff. Not so coincidently this happened around the time that a certain ex- GE executive became CEO. Merchandise went to hell. What products you found on one trip could not be found the next time because they were now stocking something cheaper or more profitable. If you could find a store person to speak with you, they were unqualified to help you with anything. Their attitudes and demeanor turned off people. I came to HATE this company with a passion and openly spoke about them as a bad example of a company that was failing from the top down. I moved all my business to LOWES. Good experience, helpful people etc. Then something unexpectedly changed.
Home Depot brought in a new CEO, who apparently can listen to customers. I was forced to go back to a Home Depot store and I started to witness a whole new expereince. Almost to the point of annoyance, Home Depot employees greet you throughout the store and actively seek to help you. Their former dour attitudes are replaced by people who seem to be genuinely smiling. I have moved from being a huge detractor to being a promoter. All those former unhelpful dour employees must have moved to LOWES. It is almost like LOWES wanted to copy Home Depot’s success but studied them when they were failing. Home Depot gets my money today.
The Second company I want to highlight is a car dealer called EAST BAY MINI in Pleasanton California. They are a part of a large dealership group owned by the Hendricks group. This is an interesting study as MINI USA has one of the most amazing brand strategies I have ever seen. They are innovative, imaginative and know how to create an experience. The Hendricks Motor Group, of which MINI is just one of many brands that they sell, tends to have a well defined formula for their customer experience. Between BMW/MINI and the Hendricks group, this should be a delightful place, but it is NOT! If you want to learn what NOT to do, this is a great place to observe.
EAST BAY MINI started out as MINI of Pleasanton. When this popular car was first introduced, this dealership knew that they had something that people wanted and they took advantage of their customers. They were not helpful and their sales practices made any experience with them less than satisfying. They were well known as a dealer that sold the MINIs to the highest bidders. I am a good capitalist myself, but treating your customers badly to make short term profits always comes back to bite you. From a sales perspective they seemed to be predators but on the service side, they did try. I was a customer of their service department more by convenience than choice but I had to admit, even though I would never buy a car from them, their service department was ok.
It is interesting as a customer experience professional to observe this place. They seem to do everything right. They obviously train people to say the right things, they stage the experience as if they were the Ritz Carlton and they survey their customers. However, as you observe, things are not always right. Every time that you interact with them, they mention their survey and how important it is to get a perfect score. They want you to tell them before any survey if you will rate them less than perfect. In a good place, they would use this opportunity to correct any problems immediately. However, EAST BAY MINI is NOT a good place in my professional opinion. It seems that in spite of knowing the right things to do, the execution falls way short. They go through the motions but good customer experience is clearly not in their DNA. They are trying to report to the stakeholders that all is well because the survey says so. Nothing is worse than insincere customer service. They have read all the books and they try to imitate best of breed but it fails them terribly. Unlike the HOME Depot example, the CEO does not seem to care. They do not listen to their customers and in this day and economy, I do not see them lasting. We can only hope that Darwin was right and that they are put out of our misery.
Net of all this? Good companies listen to their customers and when they make bad mistakes, they change. Bad companies like EAST BAY MINI pretends to listen and pretends to care but do not change because they believe only what they want to believe. Honestly, because of their good after sales service, I thought that perhaps they changed and my gut was wrong about my observations. I have tried 4 times in last 6 months to get someone’s attention in the showroom to buy a new car. I have been ignored by people who were more interested in their personal business than in their car business. In spite of their attempts to create a “ MINI “ branded experience and in spite of BMW /MINI USA’s wishes, EAST BAY MINI has shown how that bad management, poor execution and sloppy operations can sabotage your best efforts. And yes, I AM trying to tell everyone I meet…I had a bad experience and I am not a happy customer.
Now, I think that I will go find that guy outside Starbucks with the coins in his cup and see if he will listen…
Send me YOUR stories, good or bad, I AM listening.
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Posted in Uncategorized at 3:10 pm by Doug Morse
Welcome to the blog site for the Services Transformation and innovation Group LLC. Please feel free to comment on existing blog posts or add your own. If you wish to publish on our site on the subject of Service, please email info@servtrans.com
Welcome
Douglas Morse
Managing Principal and Founder
Services Transformation and Innovation Group LLC
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