12.04.09
Posted in Customer Experience, Net Promoter / Customer Satisfaction, Service Innovation, Service Science at 5:33 am by Doug Morse
I have to be honest right up front and say that this blog was triggered by a terrible customer experience with Overstock.com. While I have every right to rant and rave and be one of “those” customers, I thought that I might channel the rage into something more positive. At least more positive for us and not for Overstock, because they lost a good customer, fore-v-e-r.
I will explain the story of how I went from loyal customer and advocate to their worst critic later. What I want to share here was the thought that came to me while dealing with this company. While there are thousands examples of customer experience nightmares in retail or consumer businesses, what came to me spans all industries. You might relate to this same thought. Most reasonable companies have some organization, person or functional area called “Customer Care”. This usually is meant to be something greater than just a customer support or call center but sometimes it is just lipstick on the pig. In the case where they have truly invested in a customer care organization though, it does not mean that the company is customer centric and certainly does not mean that they have a customer centric culture. In fact, most companies I have studied who have good customer focused cultures do not have or need a department called “Customer Care”. With a great customer culture, customer care is everyone’s job. A great example of this is Zappos.com.
Here is the example that shown the light on this issue for me, today. I ordered about $100 worth of merchandise from Overstock.com. Over the years, I have generally been pleased with how they run their site and the shopping experience and I have shared my wallet with them. In fact, they have done rather well in building an online selling environment with good technology and innovation. It seems that they worked very hard on all of the back office functions to become efficient and profitable. They have done well in the online marketing area with leading edge work on communities, reputations (reviews) and targeted advertising. Based on this I made my recent mistake, by ordering from them. There were 3 items (sku’s) ordered and none of the items ordered have arrived without significant errors in process, communications, order quality etc. Being the customer experience professional that I am, this REALLY annoyed me. In this same vain however; I am the first to give the customer care group a chance to win me back. Mistakes happen, even for Zappos; and the potential customer recovery action is often more important. Needless to say, Overstock just compounded the errors.
I contacted Overstock.com Customer Care several times via phone, chat and email. In fact, they even called me proactively after I had returned a bad customer survey. Given my 30 years of experience in Customer service, I am pretty quick to understand what is going on behind the scenes. In this case, all customer interactions are with their customer care “department”. In my interactions here is what I observed. They run state of the art contact center technology and handle multi-channel contacts pretty well. They have a good CRM system and knowledge base that allows the agents to see a customer’s history and can provide good self help. The agents seem to be well trained. They use empathy; they apologize appropriately and have some discretion to provide a minor store credit as a way to affirm the apology. In all they act very professionally but clearly have a limited role within the company to make corrective actions.
In one part of my order they clearly shipped the wrong thing. Upon contacting customer care and explaining the issue they did all the right things to reorder and expedite a replacement. I was very clear that it was a picking problem in their warehouse. It was very clear to all that it was a quality process problem for them. A supervisor called me later to again apologize and took notes on the issue. The replacement order arrived and the exact same mistake occurred but now no replacement was possible as they were out of stock. The customer care person was again professional and well trained but did not offer me anything other than a refund. No recommendation for a substitute product, no further compensation for my problem etc. Basically no service recovery action was taken. In reading the incident report as written by the agent, no record of my dissatisfaction was noted.
Then I went to do some deeper research on this company and it came clear that having a good customer care department is not good enough if the customer culture does not exist in the rest of the company. In our work on the “Service Oriented Enterprise” we found that organizational alignment around customer experience worked as well or better than even a great culture. While changing a culture is hard, changing behavior is a matter of changing incentives. Someone once told me that herding cats is easy, you just need to move their food. As I looked at the management structure of Overstock.com, I got a real hint as to the issue. They are focused on being a state of the art retailer and customers were not at the forefront. If they have a good product niche, good technology then the customers would come. (at least once ). They have a SVP of Marketing who also has responsibility for customer care. This says everything about the vision and culture of the company. Here is the quote from the CEO about the person in charge of customers :
CEO Patrick Byrne said of Stormy, “I have learned a lesson I wish to share with corporate America: if you want to make your company customer-centric, just take the most stubborn, unbending, hard-headed, customer-loving employee you have, and put her over customer service. The company gets customer-centric quicker than you ever thought possible.
I have news for Patrick Byrne, I do not know how bad it was before this person came to be, but this is not best lesson for corporate America. Perhaps he should take a few classes from Arizona State University’s Center for Services Leadership or at least read the books on customer experience written for the last 20 years. The short cut might be to hire good consultants, but be prepared to make some real changes. They should not believe their own press and assume that they are customer centric. They are online retail centric, they are operationally focused but they are not customer centric.
The good news for Overstock might be that they are not alone. In both consumer and B to B environments we see this same mistake. Companies create customer facing organizations that are given the responsibility to garner customer loyalty no matter how bad the products may be or how many times the warehouse screws up an order. Good companies use these front line organizations to listen to the customer and then use the feedback to improve the rest of the organization. In good companies these folks sit with the c-suite and partner across the business silos. In good companies the incentives are aligned to balance customer value and shareholder value. It is not a mission statement, it is a process and it is a team sport. Bad companies create the organizations, survey customers, justify the results but make the customer a responsibility of just the front office.
James Teboul, a professor at INSEAD in France wrote a book called “Service is Front Stage”. In it he discusses how more and more of the back office operation and systems affect the customer facing experience. Problems in Supply Chain or Operations are now more visible and more directly affect the customer. In our research on how companies survived over 75+ years, we found that the key to survival was how companies listen and responded to their customers. They focused on customer success and customer needs. The evolution of business organizations and processes stem from the old industrial economy where internal efficiency was a key measure. Today it is not good enough to measure and reward internal metrics, you have to focus on how those metrics drive customer experience and increase the both the value of the customer and how they create value for the customer.
Back to the main question, does having a Customer Care group mean the same thing as being Customer centric or having a Customer culture? Clearly it does not. The evolution of industry leads companies to put someone or group to be in front and in charge of customers. While this type of function provided for some form of customer advocacy, the groups charged with this were for the most part an island. The goals of the customer advocate are often at cross purposes with the goals of a manufacturing engineer, as an example. Technology like CRM with so called 360 degree view of the customer is also not the answer. It is about aligning people (organization), process and technology for focus on the customer value streams that changes the game.
There is a term used today and new area of study which gives me hope. It is “Service Value Networks”. This term has many definitions and many different views of the same problem. In essence we are talking about the power of shared information and process for the benefit of others in the network. Smart Energy Grids or Healthcare systems might be two examples of a Service Value Network. In these cases they connect the customer to all parts of the delivery and provider systems with mutual goals around the intended outcomes. I see the research and development in this area helping to automate and improve customer care without having to depend on just human to human interactions. Service Value Networks tend to be end to end managed systems and processes that drive a desired value outcome. This is an exciting area for Service Science that will involve many core disciplines. Perhaps with Service Value Network designs we can eliminate the need for one group called “Customer Care” in companies who actually do not really care about their customers.
Those are my opinions, what are yours.
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11.06.09
Posted in Customer Experience, Service Innovation, Service Science, Service conference, Service education at 8:43 am by Doug Morse
Dateline: Compete Through Service Symposium , DAY 2
“Nobody cares how good you were” This was one of many good quotes from Larry Winget who entertained,energized and educated as the final speaker of the day at ASU’s Compete Through Service Symposium Day 2. Larry, who wrote the book “People are Idiots and I can Prove It”, takes no prisoners when he speaks. While he had everyone laughing in an entertaining way, people got the message about the need for people to take responsibility and be accountable. This is a message that is doubly important in the services business. He tells the simple truth that everyone needs to hear, to be successful takes hard work and excellence. No one is responsible for your successes or failure, other than yourself. Simple message,hard truths.
If you missed the symposium, you missed a great day with great speakers. We started with Rob Hibbard from Enterprise Rent a car. For those involved in Customer Experience communities you are well aware of the success that Enterprise has had in delivering a culture of great customer service backed by great execution. They were written up in Fred Riecheld’s book on Net Promoter Score called “The Ultimate Question” The founder of Enterprise, Jack Taylor, is quoted as saying “Take care of customers and employees and the business will follow.” Simple but powerful message. One example of walking the talk is that Enterprise promotes from within and to be eligible for promotion you have to deliver customer satisfaction at or above the company average. Rob said something else that I thought summarized the focus on customers. He said
“Each moment of truth brings an opportunity to earn or burn customer satisfaction / loyalty.”
It must work because their business results show the benefit of the passionate customer service.
Next up was Bob Gilligan from GE Energy. He talked about the tremendous challenge that the Electric Utilities will be facing in the near future. You may not have thought much about the power utility business as a consumer but big changes are coming. Growing markets for digital products are increasing demand on the electrical grids. 10% of electricity is consumed by digital products today and growing to 20% very quickly. Electrical Utilities are becoming large complex service networks and GE and others will need to be collaborative partners with the utilities and the consumers. The value proposition surrounding electrical grid will change from just reliable transmission of power to one that is a partnership with consumers to save money, improve the environment and manage the efficiency of the technology. This presentation fit in well with the presentation that was delivered later by Dr Jim Spohrer from IBM when he spoke about IBM’s “Smarter Planet” Initiative.
As I mentioned yesterday; the brilliance of this symposium is the mix of subjects and industries that we are exposed too. Kate Johnson from Oracle talked about a leading software company in B to B environment and their perspective of services. The lessons here are that Oracle is really using services to not only support their technology but to partner with customers to increase the utility of the software purchases while lowering their overall IT costs. Innovation is key to help move from a reactive delivery of service to a proactive delivery of value. She also talked about their investment into collaborative support models.
The last presentation of the morning was by Dr. Jim Spohrer from IBM research. Jim talked about the need for greater investment into the science of service and how SSME ( Service Science Management and Engineering ) research has yielded over an 8 x return on investment for IBM. Service innovation pays. Dr Spohrer also talked about the deficits in education and skills needed for service innovation. To solve some of the challenges of the future, especially in complex service systems, we need more University graduates who are cross disciplinary. He refereed to “T” shape people. People need deep domain expertise in something but also need broader skills and understanding of how their specialized domain interacts with adjacent domains.
The afternoon sessions were breakouts with too many good choices. One of the sessions that I could attend featured a panel with IDEO, Boeing Services, Mayo Clinics, Marriot Hotels and Petsmart that discussed Service Design. Here were vastly different businesses with many similarities in their approach to service design. The key was they they all seemed to have a well defined process for design, test and roll out of new services. One line that I liked came from Petsmart who said that you have to design and develop services that customers will pay for. Quite often customers may ask for a type of service but are not willing to a pay the price (or cost ) for that service. Service offerings need to be tested or piloted before wide scale deployment. We heard this message in other presentation as well.
Long but enjoyable day. It was great to meet new people and see old friends during the networking sessions.
It was another good day in the symposium. That is my opinion, what is yours?
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07.27.09
Posted in Customer Experience, Net Promoter / Customer Satisfaction, Service Innovation at 10:34 pm by Doug Morse
Ok, I admit that I am torn. I do not know whether to be happy that two inventive and customer oriented companies might make each other better or sad that a great culture like Zappos might get corrupted. In truth, I can certainly understand the benefits to both organizations of joining forces and it could make sense if it works as described by Zappos CEO, Tony Hsieh in his letter to employees (see: http://blogs.zappos.com/ceoletter ) .
I have had the pleasure of meeting and listening to Tony Hsieh and hearing about how he and his partners built Zappos WITH his employees FOR customers. If you are interested in subjects like customer satisfaction, customer experience or even Net Promoter you should know the story of Zappos. The fact that they sell great products with great prices and service that can WOW customers is not the best part of the Zappos story. The best part of the story is that the culture and success of the company is built around a complete and fanatical devotion to a core set of values. These core values are what allow the company to build a great brand. The key is that this is not just a set of words used in the annual reports to describe the company vision. This is how they live. This is how they build hiring practices, business policies and operating processes. It is a holistic devotion to build a brand that will always strive to delight customers. I really think that Tony and his partners have brought us a great example of what a customer centric enterprise can be.
Amazon is another company that I admire especially if you think of them as a service provider rather than just an online retailer. Their strategy around customer centricity and innovation is to be admired, in my opinion. In particular, their move to elastic cloud computing as a service was a brilliant services strategy.
Can 1 + 1 eventually equal 3? Hopefully bringing these two companies together will take the best of both to create something even better. The trick in these marriages is in the integration and in respecting the different cultures and best practices. I wish these both Zappos and Amazon a great future and hope that they can create a WOW factor for all concerned.
For those service researchers and professionals who are reading this, I strong recommend that you look at these two organizations as great examples of what service can be in this new service economy. As we have always said in my organization: “ It is not about the PRICE, it is about the VALUE” and clearly they have figure out how to bring the value to customers.
That is my opinion, what’s yours?
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07.09.09
Posted in Customer Experience, Service Innovation, Service Science at 10:43 pm by Doug Morse
Those that are reading this blog are likely amongst the already converted that clearly understands the importance of service in the world economy. Service now accounts for the majority of the GDP and jobs. Service today is being somewhat redefined in eyes of businesses that used to think of themselves as a just producer of goods rather than a creator of customer value. More than ever companies now realize that service is becoming a larger part of their overall business success. Today, most of the top public technology companies now see more than 50% of their revenues and profits come from services and not just product sales
We, at the Services Transformation and Innovation Group LLC, have been talking about how businesses need to innovate to become more of what we call a “Service Oriented Enterprise”™. People and businesses buy things for the value that they create not just to own an asset. However, most businesses of today learned to operate under business models designed by the manufacturing sector and espoused by Adam Smith in the 1700’s. These outdated business models built highly specialized and independently operating silos within most companies. These silos tend to not have the customer in mind and do not collaborate well to create value for the customers. We think that these models need to change in this new services based economy in which we live today. Examples of what we think of as Service Oriented Enterprise models exist today where major manufacturers of hard goods like tractors and jet engines are selling these goods not as products WITH services but are selling products AS services. For example, an airline can buy “power by hour” and not have own the jet engines used on their airliners. They pay for a service that provides them needed propulsion as they consume it and only as it creates value for their business.
While we have written in a lot more detail about the Services Oriented Enterprise™, (for examples see www.servtrans.com ) the key success factor in making these business transformations work has been an integrated enterprise that effectively leverages technology, process and people to co-create value for, and with, their customers. We were partially inspired by ideas in a book by James Teboul of INSEAD who wrote “Service is Front Stage, Positioning services for value advantage”. In that book, Professor Teboul talks about how front end systems like CRM and back end systems like ERP need to become more interconnected and how much of the service experience comes from the whole enterprise and not just the front line people and systems.
The other day, I was invited to attend a “Enterprise Service Transformation Summit” ( http://www.opnevents.com/programs/transformation/ ) hosted by Oracle, IBM and Motorola in Chicago on July 15th. I was delighted to see the agenda and subject matter that fit so well into what I think represents the future of business. IBM has certainly been at the forefront of the service transformation movements and leading the world in creating thought leadership and research for Service Science. While Oracle and IBM have collaborated before on Service Science initiatives as founders of the Services Research and Innovation Initiatives (www.thesrii.org ), this summit is an entirely new and welcomed commercial collaboration. More importantly, I am seeing the message that service transformation from an Oracle perspective is not just about effective use of CRM systems but in fact the effective use of the entire enterprise technology and business process elements to deliver customer value. This holistic approach is something that we preach to our clients all the time. Oracle has been quietly ( and NOT so quietly ) filling in their portfolio to position themselves as perhaps the unique technology vendor that can best integrate the end to end enterprise that will facilitate the new approaches to the service economy. The subject matter of this summit and the case studies that will be presented were not possible even just a few years ago. I would recommend to any of my clients who want to see what is possible in transforming to a more service oriented business model that they should try to attend this event and encourage the organizers to do more. Yes, it will certainly be a commercial for sponsoring companies but it is also a good learning opportunity.
I have been in the services industry for over 30 years and service is just now getting some of the recognition from businesses, Wall Street and governments that it deserves. In the spirit of full disclosure here, I do have to tell you that I have worked for both IBM and Oracle in the past. I still participate with IBM research in promoting SSME (Service Science Management and Engineering) efforts in order to drive research and education in the service profession. Neither I nor my company is directly affiliated with this event. I am writing about it because I am delighted to see and hear about more companies that are getting the new services religion. Business today is not about producing better, faster and cheaper widgets. It is about producing value for both the shareholders and the customers for whom they serve. For me service is not the new religion. The new religion is being fanatical about driving and participating in customer success. The term “service” is just a good proxy for now.
That’s what I think, what is your opinion?
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06.16.09
Posted in Customer Experience, Service Innovation, Service Science at 6:23 pm by Doug Morse
Service is all about delivering value to our customers. We all say that we deliver value, but how do we know?
Service has been described in the service science literature as a process of value co-creation between the provider and the customers. Assuming that this is true, how do we gather the input from the customers? While we may be able to observe customer behavior in a consumer situation, how is this done in B to B transactions? Aside from possibly repeat business how do we measure success in value co-creation?
These are all questions that we need to be able to answer as we advance service business models. In the model that I call the Service Oriented Enterprise™, we can measure the success because the enterprise shares in their customer’s success, financially. However this model is not practical for everyone today and we must therefore develop other models for acquiring customer intelligence and measuring the value that we might create.
On the customer intelligence side, the standard methodology today is to survey the customers. (or potential customers ) We see these surveys today in terms of Customer Satisfaction Surveys, Net Promoter Surveys, direct and indirect market research questionnaires and the like. In other situations companies might create user groups, in person or connected via the web, to try to understand customer wants and needs. In essence, most companies today still gather input by the same methods that we have used for decades. At times the input from customers might actually inhibit innovation if it is taken too literally. Henry Ford once said: “ If I had asked my customers what they wanted, they would have said, faster horses”
To a greater extent the problems that we have with the common practices today around gathering input from customers is that we are asking the wrong people. First, we create surveys with natural biases then we ask people who are likely to respond. If you send out a customer satisfaction survey after a transaction then you will also see bias in the response. Getting response rates to surveys above ten per cent is considered good but look who typically answers surveys. Those that respond to customer satisfaction surveys are doing so because they care. They either like you or hate you and the middle ground remains silent. What you don’t know will hurt you so getting silent customers to talk to you is the key.
We live in a connected world and the truth is that you customers talk to you, and about you, everyday and you are not capturing the intelligence that they are giving you. Front line personnel in particular can hear about product improvement areas, complaints (that might lead to future legal action! ) and opportunities to sell. Even if they are equipped with the tools and training to capture the information, it too will be biased. Important and valuable customer intelligence is being lost every day. Let’s stop the leaks now!
Conceptually we can solve these problems and might effectively end “surveying” as we know it. What if we could analyze every customer communication that happened within the normal flow of business? What if we could understand what people were saying about our companies in the social media, blogs, forums and web communities? And, what if that data could be presented in a way that could show us the impact to our brand value? The truth is, this is all possible today.
The tools used to analyze electronic traffic by government intelligence agencies that protect our countries can also be used to protect and grow our businesses. The technology is here today but has not been put together with the business process and business analytics needed to turn the raw data into actionable business plans. We already use voice analytics in call centers for quality monitoring or threat analysis, we have so called ‘net-bots’ that roam the web looking for targeted marketing opportunities and we have text analytics for email, chats etc. None of these are well focused to discern unmet customer needs, attributes of satisfaction or other metrics that will increase our levels of customer intimacy. In spite of claims to the contrary by CRM vendors, ‘360 degree’ views of the customer are still missing quite a few points around that compass
This opens several new possibilities for companies. The barriers to create this have nothing to do with technology or even the science. The key barrier is a company’s willingness to become truly customer focused and remember that to understand, one must first know how to listen. The Services Transformation and Innovation Group has partnered with leaders in the technology and business process space surrounding strategic gathering and use of customer intelligence. If you are interested in learning more, contact us for pilot opportunites that will help you get ahead of the competition, reduce legal exposures and maximize your future opportunities. Email info@servtrans.com for more information.
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05.05.09
Posted in Customer Experience, Service Innovation, Service Science at 12:39 am by Doug Morse
Is Strategic Planning dead?
Is it just my imagination or has strategic planning disappeared in the corporate world? Is it a function of the current economy or is it the constant short term focus on quarterly results? It seems like our world is full of instant access, instant on and instant gratification with little view or concern of the world beyond the immediate horizon. A recent discussion with strategy consultants and strategy professionals has not given me any real hope that strategic planning is still alive or well.
I think that part of the issue is that we have lost sight of how plan in dynamic environments. Executives feel that having a 3-5 year plan is not realistic because quarter by quarter challenges create constant changes in direction. However, it is exactly these environments where a plan is needed. Often the term “vision” is substituted for strategy planning. A vision is needed to define success but does not give you concrete steps that will lead you to achieving the vision. As any strategy professional will tell you, you can’t achieve success without having a way to measure success. Executive dashboards, balanced scorecards or just operational reviews are some of the basics used to track the business.
A longer term strategic plan needs to be flexible and adaptable. It cannot be so flexible as to be nebulous but it must be able to anticipate and handle change without losing sight of the long term intent. Think of this in terms of driving somewhere. We have a plan to drive from point A to point B that should take x amount of time. We plan the steps; leave point A with a few extra minutes (contingency planning) in the planned travel time. It should only take 30 minutes but you allow 45. On your way to point B you are measuring your mileage against the time to check that you are either on plan or off plan. Suddenly, you encounter an unexpected road closure and you need to detour. Given that you have a planned time of arrival, you know the distance remaining etc, you can make decisions as to the best reaction to the situation to ensure that you arrive at point B on time. Alternatively, you might have checked road conditions before you left point A, you might had extra maps or a GPS unit capable of detour routing While the maps or GPS units might direct you anywhere, knowing that you have to be at point B at a certain time focuses the options to the few that will help you reach the intended goal.
The point of the overly simplistic example is that strategic planning means that you have to have a clear destination or goal, a clear understanding of where you are today and where you wish to be at some point in the future. This provides your guiding principles. You also need measurable milestones for the journey which you need to analyze regularly and be prepared for variations. These basics are taught to every business school graduate. The ideas presented by Norton and Kaplan, from Harvard, around strategy maps, balanced score card and organization alignment advanced the art of strategic planning to some degree The challenge here as I see it, is that most of what is taught and principles involved, deal with industrial models and are focused on internally focused goals. So, even if companies were thinking strategically these days, they might still be lacking a viable plan.
What if customers got to define your strategic plan? It might sound farfetched, but in reality your customers kind of do define your strategic plan. The problem is that few vendors are actually listening to them or paying attention. Your customers react to trends in their business and make adjustments. Eventually they expect their vendors to adjust their business models to meet their new value needs. What if your goals and measurements were tied to your customers outcomes? How many companies involve their customers in their own strategic planning? Who teaches a new paradigm around Customer Centric Strategic planning? Truth be told, some of this does exist today. Certainly it is a focus area in our practice and something that we refer to the Service Oriented Enterprise™. The companies that have made a shift largely did so in reaction to an immediate business problem and not because they planned carefully to shift their focus towards a service model. The innovation came from desperation or financial collapse where suddenly they could see the value in transforming their models.
Strategic Planning is not dead but when used, is focused on industrial models and not the realities of the new services economy. Service as a science has many exciting new opportunities for research and discovery in these areas. New models are needed for financial systems, operations research and planning, organization design and change management. As people learn more about service and the effect on the economy today, there are few areas of academic research and education that cannot benefit the services economy. If we are to revive the dying “art” of strategic planning, we need the new tools and science to apply in the service economy. Opportunities abound for researchers and business practitioners to come together and drive innovation around strategic planning.
That’s my view, what is yours?
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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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