Category Archives: customer strategy

How we train our customers to go to our competitors

Angry customer

A customer complaint is a favour

Customers complain about every business.

If we are lucky, customers complain to us.  Then we can put things right, help fix their problem and learn things which make our business better.

If we are not so lucky, our customers complain to their friends, or to people they meet, or to their followers on social media.  The result? Our reputation is damaged,  we  lose revenues and we open the door to competitors to show our customers how much better they are.

We train customers not to complain to us

Why don’t customers complain to us? Because we train them not to.

Huh?

Let me explain some of the ways we do so:

We make it hard to complain
Many organisations seem to do their damnedest to make it hard for customers to complain.  Typically we do this to save money.  Most of the time this is a false economy.  Some examples:

  • We don’t make it clear to customers how they should communicate with us.
  • We make it hard for customers to contact a real person.
  • We require customers to fill in forms.
  • We require them to have their account number / service id number / customer reference number before we can help them.
  • We make them wait on hold.
  • We push them to use email (which is slower) and hide our service telephone numbers.

All of these measures stop customers complaining. Result? They (and their sales revenues) go elsewhere.

We are slow to respond
We seemed to move fast enough when we were selling our product to the customer, didn’t we? So why don’t so many organisations respond as quickly to a complaint? Sure, we may have excuses:

  • Perhaps we don’t want to talk to them before we have sorted everything out.
  • Perhaps we are having trouble working out who should be dealing with the complaint.
  • Or, perhaps, we don’t know who in our organisation has the job of keeping the customer informed.

Customers don’t care why we’re slow.  They just want it fixed – NOW. If we don’t show the same sense of urgency as they are feeling, we are showing that we don’t care.

When a complaint disappears into a black hole, we cannot be surprised if we have lost the customer by the time the complaint emerges.

We respond in ways which do not respect the customer
(Warning: linked article contains profanity)

Customers making a complaint are unhappy.  They are often angry. Often, this is the fault of something we have done or failed to do.  And they have bought things from us in good faith.

At the very least, we should treat them with respect. What does respect for the customer look like?

  • It means listening to the customer; showing that we have heard them.
  • It means we don’t make them repeat themselves.
  • It means we keep our promises  – to look into their problem or to speak to a colleague, or to put it right.
  • It means we don’t make promises we can’t keep.

And, above all, it means treating the customer as a person, and treating them as we would want to be treated.

We treat the customer as a suspect
All too often customer services go wrong because they have been designed from the outset to treat the customer with suspicion.

The result is a customer experience based on one or more of these assumptions:

  • We haven’t made a mistake, you have.
    “No-one else has complained.”
  • Our products aren’t stupid, you are.
    The instruction on paragraph 6.4.2 of the user manual is quite clear: to restore the service you have to hold the product upside down and press reset button on the underside for between 4 and 7 seconds. You mean haven’t done that?
  • We think you’re trying to cheat us.
    Yes, I know that this is our product and it shouldn’t be broken like that, but unless you have your receipt we can’t help you“.
  • We think you’re lying.
    The system can’t crash like that. Are you sure that’s all you were doing?”

Occasionally, of course, customers do behave badly; but if we start from here, the experience we offer our unhappy customers is very likely to make them feel worse.

Even if we fix the problem, we are likely to lose the customer.

It is much better to think about helping customers on the assumption that they are correct and that they have a valid reason for complaint.

After all, something has  made them want to get in touch, so something about what we are doing must be wrong.

Moreover, a complaining customer is one who is engaged – isn’t that what most of our companies want? Engagement with the customer?

Why not begin instead by designing our service operation from the assumption that we want to help people?

Then, after we have done this, we can put in place some reasonable safeguards, just in case the problem really is on the customer side.

But let’s stop doing it the wrong way round.

Think afresh about complaints

We need to think about complaints differently.  A customer who complains is giving us a gift.

They are giving us another chance to get their custom; they are giving us a chance to restore – or maybe enhance – our reputation; and they are giving us a chance to learn from their experience to make things better for others.

It’s a gift we need to be better at taking.

(Image credit: Lythia Scott Eiler, US National Archive)

4 steps to customer performance

Today, I am very pleased  to present a guest post by Jim Lucas of Lucavia.

US Army gym workout

Top performance is earned

Music, math, foreign language, computer programming. Have you ever wondered whether subjects like these can be learned or if you simply have to be “born with it”? A brief query shows a usual pattern. You’ll find a debate about the role of hard work and dedication versus natural talent, and then a consensus emerges. It takes hard work and dedication to become proficient or to master a subject (think: Malcolm Gladwell’s 10,000 hour rule). But to achieve at the highest levels requires more of the same plus a generous helping of natural talent and luck—where only the truly gifted achieve genius.

From a management point of view, simple knowledge of a subject is not interesting; only its application and performance matter.

Opinion is not knowledge

For example, think about retail customer service. Virtually every businessperson claims to know all about customer service and yet the quality and depth of customer service varies wildly between companies—and even within the same company from store to store and from experience to experience. So, why is it that customer service is so well understood and yet so poorly performed?

The answer is that most retail businesses do not have knowledge of customer service; they have opinions. What’s more, instead of performing customer service they constantly improvise, both as organizations and individuals. It is little wonder when an organization uses their 10,000 hours, practicing customer service 10,000 different ways, that customers perceive it as chaos.

Four steps to customer performance

The remedy to this situation is, as they say, simple to understand but difficult to master.

The first thing is to define customer service from your customer’s point of view.

The second thing is to write down the steps in your customer service experience including the standards of performance you demand for its proper execution.

Thirdly, systematize how you present this information to your staff—and be careful to select candidates for their aptitude to learn and to be passionate about delivering it.

And, finally, rehearse. One doesn’t become an Emma Kirby by performing only in front of a live audience at the Royal Opera House. You have to train, refine, and improve offstage to earn your standing ovations.

Jim Lucas and Lucavìa Consulting are located in the San Francisco Bay Area. They believe entrepreneurs need partners to help them turn their ideas into businesses.

(Image credit: Susan Huseman (USAG Stuttgart))

4 pillars of customer experience

PIllars of Creation, Large Magellanic Cloud, NASA

Four pillars

I set up MikeAndTheCustomer to help companies to make things better for customers.

Four principles which would drive what we do here.  I consider these to be the most important factors in shaping the customer experience.

To me, they pretty much describe the whole customer experience ball game.

  • Do what matters.
  • Do it right.
  • Do it fast.
  • Do it honourably.

Let me explain why I chose these principles to guide what we do.

Do what matters

In my view, no matter what business any of us are in, the customer experience we offer is determined by what our customers value and how we choose to address these.  These are the things that matter. Some examples:

  • If customers value getting in and out of a grocery store fast, then this speed of purchase matters to the customer experience
  • If customers value having a chiropractor talking with them to understand their issues, then perhaps understanding the customer matters more to the customer than speed.
  • And if hungover customers are buying their first coffee of the day, then maybe a quiet transaction with minimal conversation matters more to them than a cheery shop assistant who loudly wants them to have a great day with a bright smile.

This principle means not trying to make every customer experience brilliant, or memorable. It means instead paying attention to those that make a difference and figuring out how make these good for the customer.  And, after all, isn’t this what motivates many of us – to make a difference?

Do it right  

Whatever we do – buy, sell, deliver, support – we have to do it right.  Who determines what is  right? The customer.  Our customers are the arbiters of what we do, and if we do it right, we deliver the value which they expect.

This means that when our customers change, or evolve, or want new things, we take the trouble to learn with them so that we continue to do it right.

To do so, we have to be with our customers, learning with them, and about them, as much as we can.

Doing it right also means doing it as efficiently, consistently and systematically as possible.  That way we minimise error, we minimise costs, we maximise speed and we maximise the ability, as we grow, to have colleagues do it right as well.

Do it fast

I honestly believe that speed is the single most important factor in turning customer experience into a competitive advantage.

If we can deliver what the customer wants, instantly, then that means we can impress the customer with our service, we can find out from them straightaway if we are on the money and if we are not, we can fix it immediately.

The speed with which we deliver is the speed at which we learn.  The faster we do both, the better we will be, and the better will be the customer’s experience.

Do it honourably

This one needs a little more explanation..

I wanted a way a capture the spirit of good customer experience that did not involve telling stories about the virtues of  Zappos or Nordstrom or John Lewis.  Unless we work for one of these paragons of customer service (or, sometimes, even if we do) the effect of such stories is just to make the reader feel guilty that they aren’t doing better

The more I thought about it, and the more I recalled the companies I knew who really try to make a difference for their customers, the more I realised that the essence of good customer experience is about one thing. It is about being honourable.

What do I mean by honourable?  I mean this:

  • Honourable is about good manners and courtesy.
  • Honourable is about only making promises we can keep, and keeping them – as people used to say, it is about keeping our word.
  • Honourable is about doing our best for our customers (and our colleagues, and our suppliers).
  • Honourable is about being honest about what we will, and what we won’t, do.
  • Honourable is about respecting our customers, our colleagues, our suppliers and our competitors.
  • Honourable is about being proud of what we do, about what our colleagues do, about what our company does and the experience our customers receive.
  • Honourable is about caring when things don’t go well and doing our absolute best to put things right.
  • Honourable is about admitting we got it wrong and saying sorry – and making sure that it won’t happen again.
  • Honourable is about celebrating when our customers, our colleagues or our suppliers succeed.
  • Honourable is about selling honestly and pricing fairly.
  • Honourable is about helping.
  • Honorable is about holding ourselves to high standards because they are the right things to do.
  • Honourable is about aspiring to be better, all the time.

Honourable offers the key test when we think about doing a new thing: is what we are thinking of doing, and the way we are thinking of doing it, honourable?  Unless it is, then the answer is simple: we should not do it.

I believe that an organisation which follows these principles cannot help but offer a great, trusted, customer experience. What is more, they will continue to do so as customers, markets, technology and people change.

But this is just me.

What do you think?  Do you agree with me?  Or is there something I’ve missed, or with which you disagree?  Let me know.

This is important to me, and I would really value your comments or thoughts.

Thanks.

Mike

Image credit: The Pillars of Creation in the Large Magellanic Cloud, NASA

Sports Direct: the Ryanair of the High Street?

Sports Direct store in Crown PointPile ’em high, sell ’em cheap

Ian Golding, the customer experience consultant has an enviable CV and an excellent blog (which I strongly commend). Last month, he posted a great article about the customer experience offered by Sports Direct, a UK budget sporting goods store.

The point of his post was that Sports Direct offer a poor customer experience because, in effect, their goods are so cheap the customer experience doesn’t matter.

Ian also suggests that Sports Direct are effectively playing the same role in high street retail as Ryanair play in air travel.

A conscious choice

As regular readers of this blog will know, I have written about the Ryanair customer experience here and here.  I think that there may some significant differences in the ways in which they think about the customer experience when compared with Sports Direct.

I suspect that the biggest difference is that Ryanair understand the things which make the biggest difference for their customers.  As a result, they manage their customer experience to be good along a very few dimensions (on time, seen to be low-cost) and explicitly limited in others (no refunds) in order to to support its business model.

Sports Direct, however, appear not to manage the customer experience, but instead to allow it to be an unconscious side-effect of their low-cost operation.

Is simply cheap sustainable?

Because they seem to compete solely on cost, Sports Direct may be vulnerable to another company offering a similar cost proposition with a better customer experience.  Ian muses if Sports Direct’s low-customer-experience is sustainable in the face of new competition such as that offered by French sports shed operator Decathlon.

Ryanair, on the other hand, I don’t think are so vulnerable to attack on this front.  Two factors argue for this.

The first is that Ryanair actively manage their customer experience and know which aspects of the experience make the biggest difference to their customers.  As a result, if they needed to dial elements of the key parts of the customer experience up or down, I am sure they could.

The second factor is more pragmatic. As I mentioned in my post, Ryanair: Kings of the Customer Experience, Ryanair compete as a low-cost airline because their business model is ruthlessly designed round the limited customer experience they choose to offer. Other operators do not seem to have the single-minded strategic will to make similar choices – and so they live with business models which are intrinsically more expensive to run.

What you pay attention to, you get

The takeaway, I think, is this:  every business, whether it thinks about it or not, offers their customers an experience which reflects the things to which the company pays attention.  If a company focuses solely on least cost supply and appears to pay little attention to the customer experience, then customers get an experience akin to the ‘dark cave’ which Ian describes as being offered by Sports Direct.

Such companies are vulnerable to competition from others which do pay attention to the customer experience and design their low-cost operation around the experience they actively choose to offer.

In short, if we don’t pay attention to customer experience in the boardroom, we shouldn’t surprised if, in return, customers stop paying attention to us.

Image credit: Betty Longbottom under a Creative Commons Attribution-Share Alike 2.0 Generic license.

How Big Data will change marketing (part 2)

Big Data imageBig Data is coming. It will change Marketing, but not necessarily in the ways we might expect.

In an earlier post (How Big Data will change marketing (part 1)) I wanted to introduce the idea of Big Data in practical terms. My take on Big Data is not in terms of volume, velocity or variety, (as coined by Gartner analyst Doug Laney) but in terms of what it is in practice and how it might encourage action.

In my view, Big Data has seven characteristics:

  1. Big Data is not (just) big data.  Big Data is more than data warehouses and structured data repositories.
  2. Big Data is unstructured data. Big Data is messy, error-strewn and has fuzzy edges.
  3. Big Data is behavioural, not attitudinal.  Big Data is about what people do, not what they think
  4. Big Data is about small interactions. Big Data comes from the simple stuff we do, often without realising it
  5. Big Data changes.  All the time.  Big Data is never still. It is always being added to.
  6. Big Data is online, mobile and the real world.   Big Data is coming from all kinds of activity, on- and offline.
  7. Big Data is informational debris. Big Data is a side-effect of other activity – it is mainly not the information we as customers enter consciously when we think we are sharing personal data.

For marketers, the looming presence of Big Data is likely to change many things, including these:

Scientific method  The scale and nature of Big Data are making marketing a rigorous, experimental discipline.  We are getting the means to interrogate very complex data sets very quickly to decide which marketing idea works best.  This is already happening online.   Disciplines such as A/B testing and the thinking embodied by Eric Ries’ excellent Lean Start-up are already in action in many places. Examples include Amazon offering A/B testing as a free service to android developers and Barack Obama using it to raise $60m.  (See also my post, ‘Let’s go hippo hunting‘). This thinking is rapidly moving offline.   Marketers will have to master strict, efficient scientific method to succeed in this new world.

Attitudinal marketing is dead  Well, if not dead, then it’s about to enter life-support.  The  quantity and predictive value of behavioural and activity data means that what people think or feel about a product or brand will become increasingly irrelevant.  We are already finding this on the web.  If A/B testing shows us that consumers prefer to press a red button, and not a blue one, then we are better served by changing all our buttons to red than spending a fortune trying to understand why. This thinking will soon apply everywhere.

Prepare for the segment of one   Big Data will enable us to direct contextual, customised marketing directly at individuals based on such things as (say) their mobile GPS history, online and social media activity, and offline behaviour.  In effect, a marketing campaign for one person.  One implication of the segment of one is that a consumer marketing operation may well need to deliver a million tailored campaigns a year.

This is not just an automation problem.

To run at this level, with minimal errors, cost-efficiently, means the winning marketing operations will be those which adopt and implement the Lean manufacturing disciplines which enabled car manufacturers to deliver a batch size of one, with a cycle time approaching zero. (See my earlier post – SMED: The secret sauce of customer experience, for a related discussion).

We are all going to become Lean, people.

Create platforms, not campaigns  The role of the creative will change. Increasingly, we will need our creatives to design communications platforms, rather than individual campaigns. These platforms will have to flex in innumerable ways to meet the contextual demands of the segment of one.

Brand as algorithm   Brands will be formulated into heuristics – rules which can drive real-time decisions to enable real-time marketing.  The automated brand is coming.

Source, don’t build, your data  By definition, Big Data is a mix of different data sources.  Very few organisations have the capability to assemble, structure and support such heterogeneous sets of data and stay sane (and profitable).  Ignore the Big Data hype about the need to build Hadoop clusters and recruiting data scientists. This isn’t how it is going to go.

Here is how it might.  Companies are going to realise soon that they will be better off working with trusted data intermediaries rather than trying to build their own Big Data. They will pose questions to these intermediaries, such as “….what is the best way to segment the market to identify the people most likely to buy our stuff?…”, or “…when in the customer’s day are we most likely to get positive attention for our proposition…?”  or “…who could be our next customers….?”

These intermediaries will orchestrate data sources quickly to get the best answers to these questions. They may already own some data, some data they may rent, some they may commission and some will come from their clients – but such tasks are best left to specialists.  There is no need to build your own data engine. Spend your time instead trying to understand the questions you need to answer to get to market most effectively.

Of course, for companies which specialise in data harvesting, brokerage, mashup and orchestration, this intermediary role will be a lucrative opportunity. For the rest of us, being able to use such services intelligently will become an increasingly important skill.

Big Data is going to change marketing. But those marketers who do embrace this change will become hugely more effective, productive and  influential.

It will be marketing, Jim, but not as we know it.

Ryanair’s customer experience revisited

Ryanair passenger numbers
Ryanair passenger number growth, CAPA Centre for Aviation

I wrote Ryanair: Kings of the Customer Experience to challenge the blind orthodoxy that offering a perfect customer experience should be the aspiration of every business.

This may be true if you run a seven-star hotel complete with customer butlers, but it does not apply, I believe, for most companies. Most of us need to trim our ambitions to focus on things which cause customers most pain or friction and on those things which customers most value.

An excellent response

Jim Lucas of Lucavia read my post about Ryanair, the Irish-based European budget airline,  and wrote an excellent article in response: The Real Ryanair, Please Stand Up.

Jim and I violently agree that Ryanair have set out strategically to offer a service based on the core things which their customers value: “…Low cost, on time, with bags, that’s it.”

Jim, however, then goes on to say:

‘…To me, Ryanair hasn’t, “…Designed a customer experience to compete strategically.” Their customers don’t care about it and they know it. Instead, Ryanair has chosen a low-cost, high-efficiency strategy vis-à-vis their competition to meet the needs of the utilitarian traveler. (Jim’s emphasis)  In that space customer “service” is all that is required and an experience isn’t a consideration.’

I think Jim’s view is one that many customer experience practitioners share: that customer experience is something separate from the service a company designs and offers.

The whole of the experience

I don’t share this view. I believe that everything that we do which affects the customer is part of the customer experience.  This includes offering the service, yes, but also the things we do which affect how this service is perceived: (I refer to this in another post when I refer to the qualia of customer experience).

Hence my use of Ryanair as an example. What they seem to do, explicitly and intentionally, is manage the customer experience to diminish expectations around anything which lies outside of their core offering.

Get you there on time? Sure.

Cheaply? Yes.

Refunds? Don’t bother.

This setting of expectations is, I believe an absolute part of the customer experience, which Ryanair actively manage in order to support their highly successful business model. This is a strategic choice which, judging by Ryanair’s business success, seems to be working very well.

Good is better than nice

From this choice came the other point of my earlier Ryanair article: “Customer experience is not about being nice, it is about meeting strategic goals.”

Talking to some marketing folk the other day at the IQPC CMO Customer Exchange Event a couple of weeks ago, I found myself reframing this statement so that it became:

Customer experience is not about being nice; it’s about being good.

I think this is profoundly true. Customer experience is not simply an offshoot of the customer service skills industry, as many people seem to believe.

As an air passenger, for example, I value getting to my destination on time, with my bags, more than I value a customer agent’s smile if my bags have been lost.

Yet many organisations, judging by the way they run their services and where they direct their investment, seem to put this the other way round. Yes, being nice is, well, nice – but it is less important than being good at the things for which the customer is paying.

What Ryanair do, better than any other organisation of which I am aware, is to deliver on the stuff that matters to their customers while at the same time actively managing down customer expectations – and delivery – of other stuff.

They are, I believe, managing the customer experience, and doing so very well.

Which is why, while I may not like Ryanair,  I have to admire them.

(My thanks again to Jim for his cogent and considerate response to the original article. His blog is well worth a read).

Image credit: Ryanair passenger growth numbers: CAPA – Centre for Aviation

Ryanair: kings of the customer experience.

Image of Michael O'Leary 2/06/2011Silver tongued charmer

“You’re not getting a refund, so **** off. We don’t want to hear your sob stories. What part of ‘no refund’ don’t you understand?”

“People say the customer is always right, but you know what – they’re not. Sometimes they are wrong and they need to be told so.”

“Mother pays £200 for being an idiot and failing to comply with her agreement at the time of booking. We think Mrs. McLeod should pay €60 [just] for being so stupid… Thank you, Mrs. McLeod, but it was your ****-up. We’re not changing our policy.”

“We already bombard you with as many in-flight announcements and trolleys as we can. Anyone who looks like sleeping, we wake them up to sell them things.”

Michael O’Leary is the CEO of Ryanair, a European budget airline headquartered in Ireland. The quotes above are some of the things he has said at press conferences and results announcements over the years; this thinking is reflected in the uncompromising ways in which the company operates. In many ways, he is the antichrist of orthodox customer experience thinking.

The Ryanair Customer Experience Paradox

According to much customer experience orthodoxy, Ryanair should be in serious trouble. Poor customer experience should result in customer dissatisfaction, disloyalty, social media backlash and poor brand reputation.

And it does.

In spades.

But here’s the thing.  The customer experience Ryanair offers does not  affect the bottom line. In fact, one might argue that it is a major reason for Ryanair’s consistent, spectacular bottom line growth.

Ryanair has just announced yet another set of stellar annual profits. To March 2013, the airline made  operating profits of €718m ($924m) on revenues of €4.88bn ($6.28bn), up 11% from last year.  And this is no flash in the pan: Ryanair consistently grows revenues and profits every year. Ryanair is a company that likes recessions.

Something is amiss.  And on the basis of the company’s sustained growth and returns, it doesn’t look like it’s Ryanair. So is received customer experience wisdom mistaken?

And if so, does this mean that we should abandon our efforts to improve the customer experience?

Just the opposite.  Ryanair succeeds (and its CEO is noteworthy) precisely because it is one of the few companies to have understood exactly the customer experience that it needs to compete strategically – and then makes sure this is what it delivers.

Ryanair proves the strategic case for customer experience

Ryanair is a lean, low cost airline.  It sets expectations for customers about how it works and what it will and (and particularly) won’t do.

It does not burden itself with the very high costs associated with exceptional customer service, because it offers very little by way of customer service.  This is why O’Leary is so uncompromising about refunds – because if Ryanair compromise on this once, they will have to do it again.  And then they will need to employ people to manage refunds. And they will get more complaints, because customers will think that they might get something by complaining.

So Ryanair will have to staff a complaints department.  And this will lead to escalations, and reporting, and budgets, and bureaucracy, and management’s attention will get distracted by customer issues, and this will take their eye off the ball of running things very cheaply and efficiently.

And at that point, their cost base will have ballooned and they will no longer be competing on cost.  (And then their competitors will kill them by competing on service).

Instead, Ryanair are very explicit about the customer experience they offer.  They are low-cost. They will get you there, on time. With your bags.  That’s it.  No other promises. They deliberately limit the customer experience and manage it tightly because doing so is essential to their strategic success.

And against these things – the things which, because they really understand their customers, they know are most important to them – Ryanair are among the best in Europe.

And this is the lesson Ryanair teaches all of us about the customer experience.

Customer experience is not about being nice,
it’s about meeting strategic goals

We must not fall into the trap of blindly accepting that our goal is to make things a great as we can for customers. This is not the purpose of customer experience transformation.

Our purpose is instead to specify, build and deliver the customer experience we need in order to meet our organisations’ strategic goals.  And then we must drive this experience as ruthlessly and singlemindedly as Michael O’Leary drives Ryanair to succeed.

Ryanair and Michael O’Leary are, in effect, posing each of us a very challenging question:  what is the customer experience our companies need to offer so that we can best meet our strategic goals?

PS I hate flying by Ryanair, but I do so when I have to. 

(Image credit: ilovemyirishculture.com under a Free Art License)