Three Levels of Customer Focus Performance

On my website I have for years had an organizational performance oriented Customer Focus Self Assessment. From the database I have built up I have compared the top quartile and the other levels of self assessed organizational performance.

It is clear that the Say-Do gap between intentions/aspirations towards customer focus (Say) and various aspects of implementation (Do) is considerably wider for those organizations below the top quartile level.

What Is Customer Focus?

It is an organizational competence: Customer-Focus is an aligned whole-organization approach to customer satisfaction and service in which Leadership, Processes and People are all customer-aligned.

In broad stokes, this means that:

• Every action is shaped by a relentless commitment to meeting and exceeding its' customers expectations regarding product and service quality;
• Internal processes are constantly evaluated and improved to meet or exceed those expectations;
• Employees are aware of their role in maintaining a valued relationship with their customers.

Three External Performance Levels

I found an article by executive recruitment firm Egon Zehnder that identified these three externally focused performance levels of Customer Focus with which I agree.

At low levels, one is willing to help customers by providing them with what you know you have. Gathering information about the external customer and listening to feedback represents a low level.

At moderate levels, the perspective moves from "what does the customer need today" to "what will the customer need next." You know the customer from the inside, which means you can predict how s/he might respond to a given offering and you can anticipate future needs that one may address.

At higher levels, one becomes proactive in shaping the customer value proposition well beyond the transactional relationship - a trusted advisor who is intertwined with the customer's decision-making processes.

High performers build complex relationships with customers and, based on their deep knowledge of the customer and marketplace in which they compete, they provide services that customers do not yet know they need. High performers' insights about customers become a source of competitive advantage for both their own company and their customer's business.

Perhaps you can identify with any of these three externally focused levels? And, if you want to really know how you stack up as an entire organization, why not take the 10 minute self assessment on my website www.customerfocusconsult.com ?

What say you? Any comments or insights?

Would You Do Business With You?

If more company presidents and their senior managers asked themselves this question, taking the view of their customers, many would answer "probably not." The reason? Customer Service!

Much has been said, done, and written about customer service during the last three decades. Millions of dollars have been spent on programs, training, surveys and systems. However, the results have been disproportionate and often outright disappointing.

In an issue of Fast Company magazine many years ago the cover story declared "Betrayed! The biggest lie in business is 'the customer is in charge'… How could an idea so right go so wrong?" But surely, you may say, every company wants to delight its customers? That may be true, but although bold promises have been made, bad results remain a frequent and astonishing reality. The issue is not that service is poor. The real issue is that the promised and necessary great service is harder to deliver than ever!

Here are some relevant numbers about the stagnant state of Customer Service and the importance of service to success:

• The American Customer Satisfaction Index (University of Michigan Business School) stood at 75 in 1995, 73 from 1998 to 2002, and has only slowly recovered to 76 in 2010, with several dips in between.
• The Accenture Global Customer Research study revealed that in 2010 two thirds of consumers switched service providers due to customer service. From 2009 to 2010 customer satisfaction declined for each of 11 customer service characteristics.
• Also, more than 54% of consumers are not willing to compromise on levels of customer service, product options, product quality and frequency of communications with companies in exchange for lower prices.
• According to a report by Bain & Company 80% of companies believe they deliver a superior customer experience. Only 8% of their customers agree.
• Only one in three customers who have a problem and contact the organization for help are satisfied with the response they get. Customers who contact an organization for help and are dissatisfied with the response are 30 to 40% less loyal. Only 14% of customers leave for product reasons; 68% leave because of poor treatment by employees.
• A study by Michael Hepworth & Associates indicated that the average North American company has 11% of its revenue at risk as a result of customer problems and the way they are handled.
• $1 spent on advertising yields less than $5 in incremental revenue, but that same $1 spent on improving customer service can yield over $60 in incremental revenue.

So what are companies doing to resolve this issue? Today too many company leaders spend their time and resources looking for magical technology solutions. Call it “the Great Systems Seduction” if you will. Since we live in an age of "real time" and "1-to-1 marketing," the Customer Relationship Management (CRM) Systems business has been burgeoning. However, a good system does not equal good service. The European Centre for Customer Strategy predicts that future CRM effectiveness will be assessed less through hard measures and more through the stories people tell about a company and the softer and more emotional experience provided. This means companies must give the customer distinctive service experiences so they will become advocates, telling stories to their friends and colleagues and provide a convincing recommendation. Only if your people are 'turned on' will you generate such legends!

The disappointing reality in all of this is that the human element is frequently overlooked at the expense of the systems challenges. Enduring and real customer service success requires a passion for people–both employees and customers.

Author Jim Clemmer observes that "Too many managers treat 'their people' as assets with skin wrapped around them." The flip side, as once expressed by Debra Fields, President of the highly successful Mrs. Fields Cookies, is that "Customer service does not come from a manual or a system. It comes from the heart. When it comes to taking care of the customer, you can never do too much and… there is no wrong way if it comes from the heart!" Much touted case histories of customer service and experience winners such as USAA and Zappos reinforce this.

In other words, we need a balance between managing things from the head, and leading people from the heart. While rational strategy is essential, emotional intelligence accounts for as much as 70% of the personal and organizational success factor.

One financial services company president in Toronto used to say that he was “pathological” about the importance of customer service. He practiced what he preached with his head and his heart and went in four years from a number 10 to 2 market position.

Unfortunately there are too few leaders like that. For many, the distance between head and heart is far greater than the typical 16 inches… and therein lies the root cause of customers' continuing disappointment with the service they receive.

But, if the customer is king, why are so many companies why are so many companies simply not getting it? The reason is there is often misalignment between the people and the systems in place to manage them. The challenge for today's business leaders is to put their people front and center; to pursue short-term results while continuously aligning technology, work processes, and structure around the people to enable them to become customer-focused in all aspects of operation. After all, a sharper customer focus means a sharper competitive edge.

There are two lessons in this:

1) More organizations need to think more frequently and harder about the people factor in customer service, and

2) They must also pay fanatical attention to managing each customer touch-point ('Moment of Truth') to provide winning and endearing customer experience.

This is serious and hard work, and demands passion from leaders. They must be prepared to walk the talk, be patient, pay attention to customer detail, and constantly work on people and customer-focused alignments. Only then, will business leaders truly be able to say "Yes, I want to do business with me."

The seven deadly sins of Voice of the Customer (VOC) research

From an excerpt from Faster, Cheaper, Better (Hammer and Hershman, 2010) on the "seven (deadly) sins of corporate measurement", with examples of how they have undercut VOC programs by Howard Lax.

Vanity
Picking metrics that are easy to hit and which make managers look good.
Not happy with the percentage of top scores they receive, often companies treat any non-negative rating as a positive indication of loyalty or use scales that make anything short of the most egregious service failure look like success. This may make the dashboard results look better, but the illusion of excellence isn't excellence.

Provincialism
Asking customers questions along organizational lines or using internal jargon that has no meaning to them.
Operational definitions may seem mundane, but they make more sense to readers than expecting them to appreciate nuanced differences between service management vs. service delivery or tellers vs. platform personnel.

Narcissism
Measure from the company's perspective, rather than from the customer's.
Often companies insist that customers were wrong about timing measures. The underlying issue is often different staring points. The firm would track the time to resolve a problem from the point when a service tech contacted the customer or opened a service order. OK, but customers begin marking time when they first call or log the issue (or even from the first moment they experience a problem). Of course, perceived time - even if inaccurate - is ultimately what matters to customers anyway (hence the Disney "magic" of turning wait time into part of the experience).

Laziness
Assuming that the company knows what matters to customers better than customers do.
Example: a major mortgage investment player that insisted on evaluating its performance on those criteria it "knew" should matter most to customers. The company postulated a corporate advantage number that did not reflect what was most important to customers. Not surprisingly, the advantage number had little to do with customer loyalty or satisfaction with the firm.

Pettiness
Taking too narrow a scope of a larger issue.
Asking customers about the geographic footprint of their cell service, for example, scarcely captures their sense of the quality and reliability of the service.

Inanity
Losing sight of the consequences of measurement.
If you measure and highlight the number of rooms housekeeping cleans in an hour or the call center turns in a shift, don't be surprised if the numbers you are tracking improve but the guest or customer experience deteriorates.

Frivolity
Failure to take measurement seriously.
This category is where many concerns arise about mis-measurement and poorly-designed VOC research, including social media and text analysis. The who (sample or population), what (content), when (timing), how (mode of data collection) and why (type of analysis) of measurement need to be clearly understood and driven by business objectives. (Note: "We need to do a survey" is not a business objective.) These aren't simply technical issues for the data wonks; these are the critical parameters that determine the application and utility of the results. In other words, these are the issues that guard against the garbage-in part of the GIGO problem.

Who is not an existential question. Rather, it is the practical issue of the people (or households, or companies, etc.) that are included in the data and the underlying key question: What larger population is the data representative of or projectable to? Is it representative of all customers? Online users only? Those who post comments online only? Customers who came into the store and who made a purchase and paid with a store-branded credit card? Or (gulp), do you have no idea how the who is defined?

Content may seem easy but how you ask what you ask is anything but. Are respondents answering the questions you intended to ask in a consistent, reliable manner? Do you have the right breadth and depth of inquiry? The what

When often is ignored but time of day, week, month or year can have significant impact on the customer experience, as well as the response rate. This becomes particularly important when it comes to trending.

While you might not have that many options with regards to the how of data collection, there is a mode effect (i.e., how you collect the data will affect the data). The mode of data collection also will affect how much you can ask, what you can ask and how you should ask. Issues often bump up against practical concerns about survey real estate and the need to limit the length of the questionnaire.

Ultimately, the why is all about application. How do you plan to analyze and use the data? This is where the research meets the business objectives. In a well-conceptualized engagement, the why is specified up front and determines many of the who, what, when and how issues.

Doom the results

Failure to properly attend to these five measurement parameters will doom the results to the domain of the frivolous, in Hammer and Hershman's terms. In other words, lack of attention to these factors will lead to mismeasurement of VOC and mismanagement of your efforts to improve customer loyalty and the customer experience.

What the C Suite Should Know about Turning Customers into Assets

Jeanne Bliss,the founder of CustomerBLISS, wrote this blog entry which is oh so pertinent.

Despite a new understanding of the power and reach of customers, customer service continues to be a challenge for companies—even those who consider it their primary mission. Sometimes, the solutions seem confusing, bombarding the C-suite with duct-tape style solutions rather than proactive approaches.

The customer service front line can get caught in the middle of this frenzy. At one highly regarded financial services company, for example, an up-sell/cross-sell program was added to the customer service workflow. The program had an incentive to reduce call time; but followed on the heels of another initiative—one that encouraged agents to build personal relationships. The result? Agents trying to splice the two ideas together would try to build rapport and then, as their alloted time ran out, make rapid-fire offers to up-sell and cross-sell, alienating some of their best customers in the process.

Organic Growth Drives Customer Profitability

Since customer growth drives long-term profitability, it should be considered as important as quarterly sales goals. The customer commitment typically falls apart because easily understood and well-defined quarterly sales goals are more visible and immediately tangible. But these metrics don’t always line up with what’s good for customers.

Take the example of the B2B company that counted only the number of customer accounts, but not the quality. The sales team was led by an ex-fighter pilot who sent the sales force on “speed missions” to get as many customers as possible, as quickly as possible. Did they track the customer value? No, customers had become tote board checkmarks, all with equal importance. That year, there were an excess of new accounts, far beyond goals—but profits declined.

Progressive leaders understand the customer landscape and act on that understanding. Caesars Entertainment Corp, the casino and hotel company, has become a model for how to integrate metrics and increase profitability through customer service. They use a consistent set of “guerrilla metrics”—measurements that propel profitability. These include customer segment growth, successful host contacts (people who serve priority customers), first-year return on investment (by property), and overall priority customer (VIP) growth. They know that all customers are not created equal. They know who their VIP customers are and what they need to do to keep them loyal. Unfortunately, this level of enlightenment remains the exception and not the rule.

Customer Focus Questions

These five questions are for CEOs who want to place the customer front and center on the agenda:

1.How many new customers are you attracting—and what is their value? Track the volume and value of incoming customers as closely as sales figures. Understanding the quality of customers is critically important as the pool of profitable customers shrinks.

2.How many customers are you losing, why are you losing them, and what is their value? In addition to knowing which customers left, you need to know why they left, so you can find ways to retain them. Without this information, your team is running blind.

3.Why are your continuing customers loyal to you? Define customer behaviors that constitute a commitment to your brand. Without this metric, you won’t be aware when these reasons change, veer, or begin to erode. Once you have this information you can take a leadership role in demanding focused actions—even temporary point solutions—and create a strategic and focused customer service environment.

4.What is the profitability of each customer group? Understand customer migration from one profitability group to another so you can set a customer agenda. Concentrate on reducing cost and growing profitable segments. Demand accountability. The role of customers in your success justifies the attention.

5.Are your customers becoming evangelists and advocates? Customers can become key (and unpaid) members of your marketing team. Track referrals; gather information on these high-value customers. Once you understand them, you can meet them on their preferred channels and make it easy for them to increase your profitability.

What the C Suite Should Know about Turning Customers into Assets

Jeanne Bliss,the founder of CustomerBLISS, wrote this blog entry which is oh so pertinent.

Despite a new understanding of the power and reach of customers, customer service continues to be a challenge for companies—even those who consider it their primary mission. Sometimes, the solutions seem confusing, bombarding the C-suite with duct-tape style solutions rather than proactive approaches.

The customer service front line can get caught in the middle of this frenzy. At one highly regarded financial services company, for example, an up-sell/cross-sell program was added to the customer service workflow. The program had an incentive to reduce call time; but followed on the heels of another initiative—one that encouraged agents to build personal relationships. The result? Agents trying to splice the two ideas together would try to build rapport and then, as their alloted time ran out, make rapid-fire offers to up-sell and cross-sell, alienating some of their best customers in the process.

Organic Growth Drives Customer Profitability

Since customer growth drives long-term profitability, it should be considered as important as quarterly sales goals. The customer commitment typically falls apart because easily understood and well-defined quarterly sales goals are more visible and immediately tangible. But these metrics don’t always line up with what’s good for customers.

Take the example of the B2B company that counted only the number of customer accounts, but not the quality. The sales team was led by an ex-fighter pilot who sent the sales force on “speed missions” to get as many customers as possible, as quickly as possible. Did they track the customer value? No, customers had become tote board checkmarks, all with equal importance. That year, there were an excess of new accounts, far beyond goals—but profits declined.

Progressive leaders understand the customer landscape and act on that understanding. Caesars Entertainment Corp, the casino and hotel company, has become a model for how to integrate metrics and increase profitability through customer service. They use a consistent set of “guerrilla metrics”—measurements that propel profitability. These include customer segment growth, successful host contacts (people who serve priority customers), first-year return on investment (by property), and overall priority customer (VIP) growth. They know that all customers are not created equal. They know who their VIP customers are and what they need to do to keep them loyal. Unfortunately, this level of enlightenment remains the exception and not the rule.

Customer Focus Questions

These five questions are for CEOs who want to place the customer front and center on the agenda:

1.How many new customers are you attracting—and what is their value? Track the volume and value of incoming customers as closely as sales figures. Understanding the quality of customers is critically important as the pool of profitable customers shrinks.

2.How many customers are you losing, why are you losing them, and what is their value? In addition to knowing which customers left, you need to know why they left, so you can find ways to retain them. Without this information, your team is running blind.

3.Why are your continuing customers loyal to you? Define customer behaviors that constitute a commitment to your brand. Without this metric, you won’t be aware when these reasons change, veer, or begin to erode. Once you have this information you can take a leadership role in demanding focused actions—even temporary point solutions—and create a strategic and focused customer service environment.

4.What is the profitability of each customer group? Understand customer migration from one profitability group to another so you can set a customer agenda. Concentrate on reducing cost and growing profitable segments. Demand accountability. The role of customers in your success justifies the attention.

5.Are your customers becoming evangelists and advocates? Customers can become key (and unpaid) members of your marketing team. Track referrals; gather information on these high-value customers. Once you understand them, you can meet them on their preferred channels and make it easy for them to increase your profitability.