Make Customer Inequality Pay

Posted on 12 December 2011 by | Leave a comment

If you read one book over the holiday, I suggest Peter Fader’s recent book titled Customer Centricity.  Published by the Wharton Digital Press, it is a perfect read for the holiday.  It’s short (60-90 minutes), clear, and the best summary I’ve read of why companies should re-think their approach to customers.

Customer Inequality

One of the main premises is that product-driven companies may not be able to survive megatrends like globalization, deregulation, and instant communications.  Customer-driven companies, however, align themselves, their products, metrics, and actions with the most profitable customers to drive superior profitability.

Other nuggets from Mr. Fader:

  • Not all customers are created equal or as I sometimes remark, “discrimination isn’t all bad.”  Beyond this statement, however, is the acknowledgement that even your best customers have value.
  • You can’t analyze “the customer” but must instead think of each customer and use that information to segment.
  • Traditional methods to calculate Customer Lifetime Value fail when the relationship is not contractual (i.e. when the customer can purchase at will as in retail environments).
  • The value of Customer Relationship Management (CRM) software diminished as the prominence of the tool superseded that of the customer relationship.  Unfortunately, CRM became “customer data management” and the idea of growing and improving a relationship was lost in the excitement of the latest buzz.

The pivot point is to match your company’s capabilities with the needs of your most profitable customers.  First you have to understand that not all customers are equal and then you have to use customer inequality to serve them effectively and drive profitability.

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Posted in Necessary for Success

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Navel-Gazing… Your Worst Enemy

Posted on 28 November 2011 by | Leave a comment

Umbilicus intuens can be extremely debilitating.  Indeed, I worked with a leader who once remarked that his organization was full of navel-gazers… those who spent more time looking within the company than outside the company.

navel-gazing

Sir Winston Churchill’s wry description about the enemy lends a credible analogy:

“However absorbed a commander may be in the elaboration of his own thoughts, it is sometimes necessary to take the enemy into consideration.”

Here are 4 warning signs that you should spend more time considering the competition when executing your business plans:

  • Marketing literature touts features and capabilities vs. solving customer needs – Customers may indeed care that your product comes in a variety of colors, or has WiFI but the most important consideration is whether or not it addresses a customer need.  (This TED video illustrates how appealing to ‘why’ is more persuasive than showing ‘what’.)
  • Metrics measure activity vs. achievement – (see Moneyball and the Customer Experience)
  • Culture rewards those who play politics vs. help the company succeed – If you look around and find people more interested in advancing their personal prospects than in serving the customer/company, you have a problem.   Companies are teams so if one teammate begins to monopolize the energy and attention of a group, you can be sure that they are no longer serving the company’s needs to the fullest extent.  Think I’m wrong?  Ask yourself about the US politicians and our recent fiscal woes.  The needs of the country are clearly subordinated to the re-election hopes of congress.
  • Employees are ranked and evaluated against their peers vs. the industry – your company wants the best people on the market, right?  So when evaluating performance it is critical to understand which employees compare favorably to the overall talent pool.  (And just as critical to know where you have talent gaps compared to your competition.)

The pivot point is that if you neglect competitive forces or customer needs POGO’s reflection that “we have met the enemy and he is us” may indeed become a self-fulfilling prophecy.

What can you do to help align your company to focus on external factors to ensure your continued survival and success?

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Posted in Culture, Influential Factors - Harmful

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Moneyball, Metrics, and the Customer Experience

Posted on 15 November 2011 by | 1 Comment

If the customer experience profession can learn one thing from Moneyball it should be that tracking the wrong metrics can be expensive and lead to the wrong result.

Moneyball, Metrics

Part of the Oakland A’s success arose because they turned away from conventionally accepted activity-focused metrics (RBI, stolen bases, and batting average) and turned towards achievement metrics (slugging and on-base percentage).

What metrics are you tracking that are misleading you into a false sense of security?  Here are a couple to get you started…

  • Mean Time to Repair and Average Speed of Answer – Many companies track trends in ASA.  The reality is that such a measure may lead to behaviors that are inconsistent with a quality customer experience and interaction (e.g. answering quickly but immediately placing a caller on hold).  What matters more is experience consistency.  So companies would be better served to achieve smaller variance around their average.  Once they tighten the bell curve, then entire experience can be improved.  First make the experience predictable.  Customers hate surprises as much as any company does.
  • Call Duration – Zappos put an end to the fallacy surrounding this metric.  Their philosophy was to develop customer relationships (to achieve loyalty).  By shortening call duration, they realized they were limiting the likelihood of a meaningful relationship.  A more appropriate metric would be some sort of customer satisfaction measure, like NetPromoter.  Basically, “did we meet your expectations/needs?”  Not “did we get off the phone fast enough?”  The first question addresses a customer need while the second meets a corporate need for efficiency.

The pivot point is that, like the Oakland A’s, by adopting a ruthlessly self-critical look at the metrics we track, we can improve our winning percentage while reducing payroll costs.

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Posted in Customer Service, How to Deliver Customer Service

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