Everything that surrounds us was once a dream that someone made real. What do we call the people who turn such dreams into reality? Leaders.
When we bought our house, our lawyer found an old envelope in the conveyancing paperwork. In it was an ordnance survey map of the local area. On the map, someone had drawn a small block and an ‘X’, in pencil, in a field, by a farm lane. In the margin, they had written a word: “Ellendene”.
In 1938, the original owners had marked where they would build their house. They imagined it enough to give it a name.
It had been their dream. Someone made it real. And now, after many years, their dream was now our house.
All houses were once dreams. Not all of them have such stories, but for every house ever built, someone had to imagine what it would be.
Then someone had to build it and turn this dream into reality.
For every house, someone did.
It’s not just houses.
Unless we are standing naked in the wilderness (and, perhaps, even then) everything about us was once someone’s dream.
Then they help the people who work with them to understand the dream, to have them want to make it real, and to understand what they can do to help turn the dream into reality.
Because dreams are about what could be, they are about the future. Leaders help others to shape that future.
Most of us may do so only in small ways, but when we do, we are leading.
The cult of metrics can get in the way of delivering value.
A little while ago – 1988, according to the OED – people started using the word ‘metrics’ in the way we use it today. Businesses took up the term, motivated by a belief that they needed to measure things if they were to manage business performance.
Of course, businesses have always measured what they do. But the advent of lean thinking, global competition and, most of all, the growing adoption of computers and spreadsheets all about this time meant that an organisation that lacked firm control of their business would be (and were) killed off by competitors who had learned to run tighter ships.
So, metrics.
And since then? On the back of Kaplan and Norton’s balanced scorecard (a good thing), Key Performance Indicators (KPIs*) (via Mack Hanan in 1970), Statistical Process Control (SPC) (also a good thing), Six Sigma (a good thing in the right place), Management Information Systems (MIS), Business Intelligence (BI), data analytics, dashboards and now, Big Data, metrics have become an industry. Many businesses employ phalanxes of analysts and banks of computers to ‘crunch the numbers’.
Now in many organisations, the first response to a proposal to do something new or better is “…how will you measure it?” (And not, you’ll notice, “…why do we want to do this?”)
This is a shame.
In business, the things we do, we do because they are important and will make a difference: to our organisation, to our customers, to our people. What we want to achieve, the value we are aiming to get, is much more important than how we choose to measure it.
Yet too many organisations put the metrics cart before the value horse.
Important things get slowed down – or stopped – because we can’t agree on what metrics to use, or we need to wait to set up a reporting mechanism, or we are waiting for our technical people to “…set up the system” so it can measure and report.
The effect is that important things get lost, or are delayed, and the cost of doing business goes up.
Worse, we end up delivering projects that meet their metrics but miss their goal.
In extreme cases, metrics can become a madness that infects almost every business conversation. I once found myself working in an organisation that had 43,000 metrics in place.
Yes, they had the madness so badly that they had measured their metrics.
*Sigh*
Yet here’s the thing. The purpose of metrics isn’t to measure something. Their purpose is to give decision-makers a way to pay attention to something important in our business, over time.
But people can only pay attention to about seven things at a time. Any organisation has a core of a few things to which it needs to pay attention just to keep things going. Money, for example, or customers, or the amount of work we need to do, or quality, or risk.
If we can only pay attention to seven things, we have only a little room to pay attention to anything else: the things we need to change or make better. We need to pick these things to which we want to pay attention very carefully if we want them to succeed. They need to be important.
And if we have to pick our way through hundreds or thousands of metrics, then we can’t focus on these one or two important things. Or if, by some monumental effort of concentration, we can focus on these one or two things, we can only do so for a moment, before we are distracted by something else.
This is one reason why so many important initiatives hit the sand; why ‘Top Management attention’ is so transitory; why we lose sight of our goals in the middle of projects – because too many things are competing for corporate attention.
This is not to say that we don’t need metrics. On the contrary, having the right metrics against good standards with effective, practical and timely mechanisms for reporting them, is more of an imperative than ever. The argument for keeping tight control of business essentials is much stronger now than it ever was in 1988.
We have to begin the conversation about metrics differently. Perhaps we should start by asking what do we need to pay attention to, and why do we need to do so? If we can only play attention to seven things, what are the seven in which we want to invest our time and attention?
The dirty little secret of metrics is this: if they don’t help us to pay attention to the things that are important, then they are a distraction, and are stopping us from running our business properly.
For the key to getting things done in business isn’t to measure things – it is to pay attention to them.
So does this justify the reported $125bn (or $50.1bn) (or $17bn) which is forecast to be spent on Big Data in 2015? Perhaps, but I doubt it.
I remember another time when data promised us a brave new world. In the olden days of the mid-nineties, the story, cited by sources such as the Financial Times, was how analysis of shopping baskets for a mid-range US store on Friday nights showed a previously unknown correlation between buying beer and buying diapers. This story and others like it made the idea of data mining credible as it promised a whole new world of customer insight and understanding.
The beer/diaper story, it turns out, wasn’t true, but it didn’t stop the stampede.
Companies spent fortunes on things called data warehouses, invested in stuff called knowledge management and we were all supposed to make lots of money by having greater insight into customer behaviour.
Consultants, vendors and the media who were all beating the data mining drum.
The consultants, who told us that this was the next big thing and that we would go out of business without it.
The vendors, who sold us the kit and the software and the maintenance contracts and the patches and who told us that the issue we were complaining about “…was a known bug that would be fixed in the next release…”.
The journalists and the advertisers, who sold ad space and wrote articles about “Making the case for knowledge management” and held conferences with titles like “Data Warehousing: A strategic imperative” or some such.
So we went to the conferences and read the articles and called in the consultants and bought the kit and installed the software and did the management of change and ran the benefits realisation exercises and employed new people with strange job titles and tried, as the dust settled, to see the step change in performance promised to us.
While the drum-majors walked away to do the same thing again with new clients.
Result? Billions of dollars siphoned out from the pockets of companies who were doing real things for customers and into the coffers of these drum-beating companies.
At the time, I recall that the consultants, tech companies and media companies in this space all posting phenomenal revenues.
What I don’t recall is reading so much about the great profits their clients made from all this knowledge management and data mining.
As far as I can tell, the promise of data mining and knowledge management was a promise unkept.
And now we have Big Data.
Perhaps Big Deja Vu might be a better term, because it all sounds very familiar.
The scale, depth, density and timeliness of customer data available to us is magnitudes greater than ever before. Mobile data, geolocation, behavioural antecedents, digital payments, social media and evolution of the web are streets ahead of the consumer purchasing information upon which the promise of data warehousing used to rely.
I just feel we need to think harder about how we want to take advantage of it. The same people are beating the drum and more and more companies are falling into step.
But the drum beat isn’t our drum beat. It’s the beat of market hype, of technologists seeking a market, of consultants seeking The Next Big Thing.
It’s not the drum beat of the customer.
What customer insight are we missing? Why does it matter? What could we do better for customers if we had it?
And (this is the kicker) what difference will it make? Really?
If we are to avoid being vendor victims, we should begin – as always – with the customer. And if we can answer these questions properly, then perhaps Big Data may really be of value to customers and to the companies that sell to them – and not just to those who are selling tickets to the Big Data bandwagon.
We were snowbound at a corporate retreat in Princeton, New Jersey. We had exhausted the formal agenda and were waiting to hear if the snowploughs had freed the I-95 so that we could get to the airport and go home.
So we were having a few beers and having a general discussion about what works for us in business when Kevin, an experienced colleague who worked in our manufacturing practice, said something so true and so simple that it has stuck with me at every step of my career since.
We were talking about creating and keeping customer relationships, and he said: “Every time I’m going to meet someone for business, before I go in, I ask myself, ‘how can I create value for them in this meeting?’ If I can do this, I know they’ll want to meet me again. They’ll learn to trust me. And, when the time is right, they’ll buy from me.”
The snowploughs came and we put down our beers and caught our planes home, but his simple mantra – ‘how can I create value for my customers each time we meet?’ – has served me well since then.
Because this is the secret of customer experience.
If we want to make the customer experience better, it’s simple. We make every customer encounter something that our customer values. Then we repeat for every step of the encounter.
Find this value and maximise it. If the encounter doesn’t add value, don’t do it. That’s all.
What’s value? It’s whatever the customer thinks it is. Things like:
Treating them like a person
Displaying courtesy and good manners
Smiling when we see them
Pitching things in their terms, not ours
Treating the customer as someone who is valued and not a potential thief or fraudster (Banks, are you listening?)
Recognising them when we see them again
Recognising them and rewarding them for coming back
Apologising (and not with the weaselly “I’m sorry you feel that way”)
Understanding their problem before offering a solution
Making the customer look good (always a good thing to do)
Showing we are thinking about them, and what matters to them, even when they aren’t there
Being respectful – of the customer, of our colleagues, of the competition
Being kind.
Making it easy
Taking away something that is inconvenient for them
Simplifying the transaction (or better, simplifying the customer’s situation)
Offering control to our customer (of the conversation, of the transaction)
Making it so that there is only one way for the customer to do something – and it’s always good
Being patient
Making it easy to pay
Making it easy to get money back
Pricing fairly
Being consistent
Making it easy to talk to a person (if that is what our customer wants)
Making it easy not to have to talk to a person (if that is what our customer wants)
Making it easy for the customer to change their mind
Welcoming returns with a smile
Improvising if the customer needs it
Anticipating their questions (nicely)
Listening to them. REALLY listening. (Note: this one is hard).
Being honest
If we can’t do it, saying so
If someone else can do it better or cheaper, saying so
Pricing things in ways that are clear and easy to understand
No surprises – being up front with bad news and what we are doing to fix it
If there is a quick or cheap fix for their problem, solving it for them
Refusing to sell them the wrong thing
Keeping our promises, no matter how small (especially the small ones)
Being interesting
Being funny (but not offensive)
Speak about their problems more than our solutions
Helping
Explaining what is happening and what will happen next
Putting ourselves in their shoes
Giving them meaningful choices
Tailoring what we do to what they want
Keeping their anonymity (if that is what they want)
Reassuring them
Taking responsibility for sorting things out, even if it is not our fault
Solving their problems quickly and consistently
Giving them something
Offering something extra (a lagniappe, for example)
Giving away insight or knowledge because the customer needs help
Letting them take the credit
Giving them things because we think they might like them
Making it cheaper because they’ve come back
Accepting that if they have got things wrong, it’s our fault for allowing it to happen
Speed
Being fast
Being instant
Letting them be slow. Waiting for them. Patiently. And with a smile.
Being convenient in ways that matter to them
Asking them how quickly they want it and getting it to them whenever they say
Each of these will make the customer experience better. Better, customers will value dealing with us. And if there’s value, they’ll be willing to buy from us. And they’ll want to do it again. And this is the bottom-line reason why customer experience matters.
You can’t control customers’ feelings, or their personal circumstances, or how much attention they are going to pay to you. Their experience of your brand, or your product, or your service is down to how they feel. And you can’t control their feelings.
But you can make it better
You can control how you maximise the chances that the experience is positive.
Here are ten examples of what I mean, described, of course, from the customer’s perspective. If you make any of these better, your typical customer’s experience will improve.
You’re quick.Waiting is a cost to me, the customer. It’s a cost that I don’t want to incur. Whatever I want, I want it now. The more you can get me what I want straightaway, the more I like it. (Delay also makes it more likely that things will go wrong, and I don’t like that).
You are easy to deal with. Whatever I want to do is so easy I don’t have to think about it. I get the information or the product or the service or the support I want in the ways that I want it.
You get it right. What you sell me is what I want. And what I want is what I get. And it doesn’t go wrong.
You care if something isn’t right. If it does go wrong, I want you to know before I do. I want you to fix it with no inconvenience on my part. And I want you to put right anything that went bad because your product went wrong, before I have to ask.
You prove that I can trust you. I want to know, before I buy, that I can trust you. You give me value anytime I engage with you, whether I am buying from you or not. If every encounter with you provides insight, advice or help in ways that matter to me, then I’ll trust you with my money when it’s time to buy.
You trust me.You don’t behave as if I am a thief or a fraudster. You acknowledge, listen and act on what I tell you. If you need to do things to make things secure, you explain why and you do your best to make it easy and trouble-free. You take my side.
You are honest about what you can’t do. If you can’t help me then you let me know so I don’t waste time or have incorrect expectations. And then you help me in whatever way you can.
You act in my interests. If something is better for me than what you are offering or what I am requesting, you let me know and you help me with it.
Improve any one of these things and you will make the customer experience better. In addition, you will cut your costs of sale and service and make your people happier. Improve all ten, and the experience you offer may well become the stuff of legend.
(I wrote this and then discovered Seth Godin’s wonderful post: Your call is very important to us which covers related ground, but with added goodness (I love the idea of routing delayed calls to the CEO’s spouse…) Enjoy).
You can please some customers all of the time. You can please all customers some of the time. But you can’t please all of your customers all of the time.
Here’s the thing: I hate to be helped in shops. I don’t like it when an assistant approaches and asks “Can I help you?” That’s just me. Maybe it’s because I live in England. I want to make up my own mind and seek help from an assistant when I want it.
My friend, on the other hand, likes an assistant to help him. He resents it when he sees staff standing around, not offering to help. He wants them to come up and ask.
What’s a shop to do? The customer experience they offer is damned if they do and damned if they don’t.
Many companies try to please everyone. They try to cover all the bases. They attempt to offer an experience that handles their main set of target customers and the others, the exceptions. Result? The experience they offer is confusing. They serve neither set of customers well and both groups of customers become unhappy and leave.
In our businesses we want to avoid this. We must analyse customer data to get insight into what matters to our target customers. We must combine this insight with our own understanding of what we are good at, to think about the experience we want to offer.
Then we must choose to provide the experience that works best for the customers we want to get and keep.
When we do, we know that such an experience won’t work for all customers. But we accept this because we will be confident that it will work for the majority of those we want to serve.
The customers we lose are the price we pay to enable us to offer a great experience for our target market. Why is it worth paying?
Because if we can truly offer a great experience for their target market, then we have a real edge over the competition. We will secure a greater market share. And we can seek higher margins as our customers accept that higher value justifies higher prices.
Even better, we save money. We won’t waste time, resources and attention on exceptions and variations for customers whom we are not targeting and from whom we will get little return.
Of course, the bright reader (and all my readers are bright) will have spotted what has happened here. The quality of customer experience we offer corresponds directly with the quality of our business strategy.
If we have made clear strategic choices about the customers we want to serve, we can confidently provide an experience that they will value.
If our strategy is unclear? Then we can only offer a confused or ambiguous customer experience.
So yes, our customer experience is damned. But it can happen in two ways. It can be damned because we choose to serve our target customers brilliantly and with confidence because we know who they are. By doing so, we are willing to accept that some current customers won’t value the experience we offer and may leave. And we accept this cost, because the payoff for our core customers – and for us – is so great.
In this case, our customer experience is a clear expression of our organisation’s strategic intent.
But the second path to damnation is far, far worse. It happens when we try to please everyone, because we don’t know (or are unwilling to choose) which customers we want to serve. Then we can’t offer a winning customer experience because we have to compromise to try to keep everyone happy.
In this case, the customer experience we offer is equally an expression of our organisation’s strategic intent. But what it expresses is ambiguity and confusion.
Keeping everyone happy may be a good intention, but it is also the road to Hell.
So maybe we have to accept that our customer experience is damned. But let’s choose how we want it to happen. For when we do, we give ourselves a chance to give our customers an experience that will make a real difference to them and to us.
“Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?”
(Steve Jobs’ pitch to John Sculley, then CEO of Pepsi,
to persuade him to become CEO of Apple in 1983).
Every day for the past few months, I have walked past this statue of the dancer, David Wall, by Enzo Plazzotta. You can find it outside a block of upmarket flats on Millbank in London. The title of the piece is Jeté, a ballet term that refers to a leap.
Honestly, for about a month, I hated it.
David Wall’s face is set almost in a pout and his hair – well, it would do well in American Hustle.
But I am a sucker for excellence. It grew on me. I noticed the precision that the sculptor used. I started to look at the figure of the dancer himself.
The sculpture, magically, captures the dancer in the air. His leading foot turns, just so, to maximise extension and clarity of line. His rear foot also turns, but differently.
His fingers, at the end of his immaculately extended arm, are all where they need to be. His trailing hand makes the line of his leap perfect.
This figure in metal, like, I imagine, the figure in the flesh, transforms from something lumpen and heavy to something free, elegant and apparently effortless.
Which, I know, is the exact opposite of the truth.
EVERYTHING about this leap is deliberate. The turn of the ankle, the angle of the leg, even the spacing between the fingers.
Everything.
Deliberate effortlessness like this is only possible through untold hours of training, development of technique, feedback and coaching, just to produce an instant in the air which, were it not been captured in sculpture, might go unnoticed.
The purpose is not just to make the leap, but to strive to make it perfect, even if the only person who knows that it is perfect is the dancer himself.
This is, I suppose, what art means: to conceive of what might be right and then set oneself to achieve the impossible standards that it demands.
And the same applies to business. The best businesses, the ones we love, the ones we welcome into our lives, exist because the people behind them want to do something, to achieve something, to make a difference.
But that is not what they are in business to do. (and which is why, sometimes, their investors get grumpy).
The money they make is a side-effect. They make money because they are doing the right things. Because they (and their customers) in what they do. They believe that taking infinite pains to get things right; taking deliberate care about every last detail; and striving for a vision that has meaning, are things worth doing in themselves.
But, like an artist who prostitutes himself for money, as soon as a company forgets this, its art suffers.
I was once asked by the CEO of a multi-national tech company what I thought might be the difference between a ‘good’ company and a ‘bad’ one. I said that I thought I could see one core difference. A ‘good’ company’s primary concern is its business and how it can do better; a ‘bad’ company’s primary concerns are ‘the numbers’ and how it can make them better.
Customers don’t buy numbers. They don’t experience numbers. They don’t want numbers. They want the stuff that a company does that solves their problems, gives them value and makes them feel good.
My months of walking past Enzo Plazzotta’s sculpture have taught me something about business. The simple delivery of business, doing it better and making some cash – this is the craft of business. But striving to create and run a business which customers enjoy, which employees want to drive to greater heights and which makes a genuine difference to people’s lives – this is the art of business. This makes being in business worthwhile.
It’s open to all of us. If we can conceive of greatness, if we take deliberate pains to get it right, and if we set and meet impossible standards, then we too might create something wonderful.
I believe that, if it wants to, any business can achieve wonder. Can make customers want to be part of their adventure. Can have their people achieve amazing things just to be able to say, “…we did that”. Can have customers enjoy, and value, what they buy.
This is why I spend my time with organisations to make the customer experience better. Because it is at the point when customers experience what we say and what we do, that, perhaps, we make masterpieces.
If our business has to compete in the long-term, there are (with apologies to Michael Porter and his chums in the business theory business) really only three ways to do so – and just one that endures.
There’s no point in competing solely on price because that kills margins and can’t be sustained. And there’s no point in competing just on innovation because sooner or later everyone catches up and no-one, no matter how good, can churn out new technologies on a treadmill forever.
But most government departments don’t have competitors. Their customers typically have to use them, whether they want to or not. So does this mean that public sector organisations can ignore customer experience? Or should they, if they want to minimise costs? After all, it’s just another management fad, right?
Quite the opposite. Competitive advantage is not the goal of customer experience – it is merely an excellent side-effect. Let’s not forget that the main purpose of any organisation is usually to offer a product or (more usually for public sector organisations) a service that their customers value. If an organisation can offer a good customer experience, this enables that organisation to do what it exists to do – but better.
This applies just as much whether an organisation is selling cars, building houses, collecting taxes or handling planning applications. The only difference is that in the public sector, value to the taxpayer is paramount and the purpose is service, not profit.
The return on customer experience
The benefits of offering a good customer experience have particular resonance for the public sector. Benefits such as these:
Fewer people complain, so an organisation saves on resources it would otherwise spend on handling exceptions and resolving issues.
A good customer experience relies on consistent service delivery (how else does an organisation keep its promises?), enabling organisations to benefit from reduced variation, lower complexity and more economical service delivery.
Better and more fundamental understanding of the customer, so organisations learn how to adapt and learn faster and more flexibly.
And organisations that offer a good customer experience are usually good places to work, so they keep good people and help them to stay motivated.
The public sector payoff
Any organisation would value such returns. So would their customers. And for public sector organisations, these translate into two other, distinctive benefits.
First: any public sector organisation that delivers services well, efficiently and in ways which its users value – this immediately reflects well on the elected officials responsible for it. This political dividend has unique value in the public sector.
And second: we are all invested in public services, as taxpayers and users – so when a public service delivers an excellent customer experience with all the return that we see here, we all benefit.
They are all management fads: labels for bundles of fashionable ideas, or processes, or technologies all sold on the promise that they will improve the business.
Most are based on some nuggets of common sense. Some can point to businesses that will testify that they adopted the idea / technology / process / philosophy and things got better.
And yet, and yet…
The money problem
If you remember, we stipulated that businesses exist to make money. If so, then the rationale for these silver bullets has to be that, in the end, the businesses which adopt them make more money.
In my experience, for most companies, these fads almost always end up being things which businesses do insteadof making money.
If you add up the cost of the investment in technology, consultancy fees, corporate effort, time and disruption of attention associated with each fad listed above, across all the companies which have tried them, then I wouldn’t be surprised if the total spend per fad was some way north of billion dollars.
Each.
In some cases, much more.
I would be also be very surprised if the return per fad was anything like as big, even if we only look at those which have succeeded.
We need to do something different, to make things better. We adopt one of these labels, dress it up as an initiative and believe that it will give us a solid business return – but most of the time, it won’t.
This is the elephant in the meeting room. We think that doing these things will make our business better. It’s the other way round: if we need to make our business better we should do whatever helps us get there best, and not just assume that management fashion will be the simple silver bullet we need.
I’m not saying that any of these initiatives are bad things. They almost always are are based on some nuggets of common sense or insight and a few can point to some companies that will testify to the results they achieved.
A hidden law of business
So what is wrong? I think that what these good ideas into money pits, that they fall foul of one of the hidden laws of business. Managing a business of any size is so complex, demanding and fluid that success requires significant intellectual effort. But this is where the law comes in:
Most people will do anything – including sustained hard work – rather than think.
Thinking about something – trying to work out the right thing to do, or solving a persistent problem, or trying to determine the best way to proceed, or working out what needs to be done if we are to succeed – all of these are very difficult.
This thinking is just hard. So hard that most companies and most people find it easier to lose sight of the bottom-line returns they are seeking, and focus instead on successfully completing the big tangible milestones which each fad entails.
CRM system installed? Check.
More sales as a result? …err…
BYOD policy in place? Check.
Staff working more productively as a result? Whoops.
Net promoter score programme installed? Check.
Customers staying with us longer and spending more as a result? Who knows?
It is just so much easier to focus on the deliverable, rather than the outcome.
Outcome-based thinking
How can we beat this problem?
Begin with the outcomes. Before committing to any of these things – or any other change, we need to list the three to ten things which fit under this heading:
By the end of this activity / initiative / project, we will have..
For example:
By the end of this CRM implementation, we will be using it to increase sales revenues by 15%.
By the end of this Lean project, we will have applied it to reduce unit costs by 20% .
By the end of this customer experience programme, we will have increased customer lifetime revenue by 50%.
Not systems installed but systems used.
Not stakeholders trained, but stakeholders doing.
Not stuff delivered but value achieved.
Once our outcomes are clear, then we can by all means adopt the initiative we like; we just have to make sure that the focus is on the outcome, not the groovy new jargon / framework / system that the consultants are proposing or the technologists are selling. And if our focus is on the outcome, we can pay attention to other work we have to do if our project is give us the value we want.
Of course, I may barking up the wrong tree. So please: prove me wrong. Are you implementing one of these fads (or some other)? Do you recognise this problem? If so, how have you overcome it? If not, what are you doing to ensure that real value is delivered?
Imagine for a moment that we make swords for a living. We need a market for our product. Where are the opportunities? After extensive market research (in our local cinema and some classic books) we find our target customer segment.
Pirates.
A dynamic and exciting market.
Needs? Simple enough: a blade to carry between their teeth as they swing onboard a victim’s ship and something to parry other swords during spectacular duels.
But a standard cutlass already does this job pretty well. If we try to compete just by selling these, then pirates will just choose the cheapest ones. And we can’t compete on price with low-cost blacksmiths working on the Barbary Coast.
We need pirates to see our swords as better than those of our competitors. Do we need to offer a better sword? Perhaps something incorporating the latest technology?
Perhaps a multifunctional sword?
We don’t know.
We need to know what matters to these buccaneers. What are their problems? Their aspirations? How can our swords can help them address these? And how can they do so do so in ways which pirates value and our competitors find hard to copy?
Market insight
So we blow the rest of our market research on more movie tickets and popcorn.
What do we find? Pirates are fundamentally conservative and don’t want radical new sword designs. They don’t want the equivalent of a sword iPad or a swiss army sword.
Other pirates would laugh at them.
Worse, so would their victims.
Is our venture doomed?
Not in the least. For this finding shows us a real customer need that we can meet.
Pirates don’t just want a sword which slashes through the air; they want to look good. A pirate has to look…dashing.
They want others to tell stories about their exploits. Sea voyages, even for pirates, are long, and stories told during endless night watches become legends told in taverns on shore.
And every pirate wants to be a legend.
A unique customer experience
And so we see that our swords have to be special. Sharper than anyone else’s, with blades black as midnight, maybe, with handles encrusted with cabuchons and rubies and trimmed with gold.
Each as unique as its dashing and charismatic owner. Each a sword fit for a legend.
And each sword has to be challenging to get, so that each owner not only gets their sword, but a tale as well.
In short, we need to offer our pirates not only a distinctive product, but a unique customer experience.
So we select our distribution channels very carefully. Caves on obscure islands, perhaps, or at the top of distant mountains. Then we throw in some traps, some quicksand and some fire swamps for good measure.
We prepare to go to market with a below-the-line PR budget to plant rumours of mysterious and wondrous swords in taverns, and above-the-line marketing through publication of obscure and blood-stained treasure maps (strictly limited edition).
And we make sure that the price for each sword is at least a treasure chest full of gold doubloons.
So now we know how we are going to get rich.
A time for thinking of risks
And it is at this point that we begin to think about the risks.
What kinds of risks? Pirates aren’t particularly trustworthy, so we’ll need to make it hard for them to double-cross us. We’ll need the ability to check treasure chests for poison needles among the doubloons. We’ll need good protection for our supply lines.
We will do all these things and more, but we do so knowing that the thing that matters is the customer experience we offer and how it meets their needs.
And while we act to address these risks, we don’t lose sight of what we are in business to do, or what our customers want, or the business model we have designed around meeting the needs of our customers by giving them a unique customer experience.
We think about our customers and how we will do business – and then weseek to manage the risks.
…And this is why banks will never get the customer experience right.
Banks begin with risk
Most businesses succeed by thinking about customers and the opportunities which these customers represent. They look for ways to help customers overcome their problems and achieve their aspirations. They try to align what their businesses do with what their customers want.
When businesses do this well, they become customer-centric businesses; when they do this badly, they find it hard to keep customers and grow.
Most businesses – except banks.
Banks begin, not by understanding customer needs and aspirations, but by considering customers as risks. They begin by assuming that customers will lose the money that banks make available to them, either through fraud or theft or poor money management or bad investment.
So when they consider the services they offer or the customer needs they will meet, banks start by seeking to minimise the risk which their customers pose.
So they make it hard for customers to become customers, because each new customer is a risk. They make it difficult to change between products as changing products carries a risk that something will go wrong.
Where possible, they try to offset such risks, usually through fees or charges. In effect, they ask customers to pay to cover the risk of their own untrustworthiness.
And they love being in the middle of deals as this enables them to offset risk at one end against risk at the other (and doubles their fees).
Bankers are proud of this. Speak to them and they tell you that a bank’s core competency is the quantification and management of risk. A key element of this is customer risk.
And so banks are hard-wired against innovation, because innovation requires both leaps of faith and a willingness to consider new ways of working with customers. These are, by definition, risky.
And, unlike the customer-centric businesses to which we refer to earlier, banks, because of this mindset, cannot align their businesses with their customers; instead they require that customers align their businesses with the bank.
A matter of trust
Banks can’t help being like this.
It’s not their fault.
It’s just that no matter what they do, they can never become customer-centric.
This is the effect of beginning with such risk thinking. It means that banks, unlike every other business, start thinking about what they do from a different first principle:
Do not trust the customer.
This is why, for example, banks find it so hard to offer good customer service when things go wrong. As their business is predicated on pushing risk and liability onto the customer if something has gone wrong, the working assumption is that it is the customer’s fault.
And when things go systemically wrong (LIBOR, PPI, money-laundering, credit card insurance) it is only after huge fines and new laws that banks accept that maybe it was their fault and that the customer might have been right after all. (Although they don’t really believe it).
Banks aren’t bad. (Most) bankers aren’t evil people. They are trying to do the right thing, most of the time.
Pushing uphill
But when your business is designed from the ground up on the assumption that you can’t trust customers, making your business better by aligning yourselves better to customers is going to be difficult.
And so while there are now many people all over the World in banks doing great work to try to make the customer experience better, their prospects for long-term success are limited.
Because no matter what they do, the customer experiences they create can only be an overlay on a business designed not to trust customers.
Any successes they have can only be maintained by rigorous and sustained attention to the customer experience. And when cost-cutting, new regulations, new systems or some other stress hits (as routinely happens in banks), their eye will leave the ball and the fundamental customer attitudes which underpin the banking model will kick back in and all their good progress will inevitably unwind.
Because, under stress, we all revert to the behaviours where we feel most in control and have greatest comfort. For banks, this is thinking about the customer as a source of risk.
A choice of experience
As far as I am concerned, I want to make things better for customers. So, in the main, I think I’d prefer to be in the sword business, selling to pirates.
And, thinking of the customer experience, wasn’t it a pirate who made famous the line: “As you wish*” ? – which is as perfect a customer experience philosophy as is possible in three words.
Yet for the life of me, I can’t think of any famous quotes from bankers about customers at all…
For a video of our target market, see here:
or here:
* Dread Pirate Roberts, in The Princess Bride.
(Image credit: Swiss Army Sword by Glenn Roberts, http://dribbble.com/shots/1207517-Swiss-Army-Sword?list=users)
The Need for Speed, my latest guest post for HP Value Exchange, has just been published. Read it to find out why I think that the speed of the technology organisation is a key factor in setting the competitive advantage of a business.
For customers, for colleagues, for growth: faster is better.
The Business Value Exchange is an editorial Web site that focuses on presenting different perspectives on challenges faced by senior business and IT leaders, to help them drive more successful business outcomes.
When we want to change anything in an organisation, we will meet the Grumps. Grumps are colleagues who appear to support the project (and who may actually believe that they are acting in the project’s best interests) but whose presence is toxic to success.
The most telling sign that someone is a Grump is to note their effect on the energy of others.
If their presence adds to the energy of the team – if they are ‘radiators’* – then they are probably not Grumps.
If, however, their presence sucks the energy from the room – if they are ‘drains’ – we need to be careful.
How they speak is often a giveaway. Grumps are people on the ground who reveal themselves in meetings and emails and water-cooler conversations when they say things like:
“…I’m not saying this is a bad idea, but…”
“…We’ve tried this already and…”
“Let’s be realistic, here…”
“…we have to be careful not to throw the baby out with the bathwater…”
Or (as I have genuinely heard in more than one company):
“…we have to be careful not to trust customers too much…”
…and similar statements which have the facade of reason but really reflect fundamental antipathy.
They raise seemingly legitimate objections which are never about the intent of the project, always about the implementation. Before long, the team is spending more time and energy managing concerns raised by Grumps and less in delivering the project. Slowly, imperceptibly, Grumps force us to move our focus away from making things better for customers to trying to keep the Grumps happy.
And so the project fails – or more typically, fades away, as the effort needed to deliver something good gets brought down by the drag of managing the Grumps.
How to beat the Grumps
These three steps can help us beat the Grumps:
Get them off the bus** We don’t let a Grump be a member of our project team. It doesn’t matter how technically or managerially skilled they are, the drain on energy and time will not be worth it. Much better to work with less-skilled colleagues who are radiators with the energy to succeed than let Grumps drain everyone’s momentum.
Don’t give them a veto It is a mistake to seek a buy-in from a Grump (or anyone else for that matter) unless their approval really matters to the success of the project. For if they object, as a Grump will, we now either (a) divert resources and time to overcome their objections or (b) ignore their objections and go ahead, alienating them even more. And if their approval is not needed, why did we seek it? (Sigh: So many companies get this one wrong).
Surround them with success When we change to make things better for customers, the Grumps come last. We begin by making the changes work with colleagues who are prepared to give them a go, ignoring the Grumps. Once we have proven that the changes make a difference, then we make it work with the Grumps. Grumps seek support for their belief that the project won’t succeed. Proven success defuses such support.
Delivery de-Grumped
Good customer experience projects are all about leverage. They seek the places and strategies which yield maximum results in the fastest time. Grumps kill leverage, by forcing us to consider their objections instead of the customers, slow us down by distracting our attention and diverting our resources, and kill our projects by slowly sucking out our energy and momentum.
But if we can identify Grumps early and adopt the right practical strategies to prevent the damage they can cause, we remove one of the biggest barriers to customer experience project success.
Have you had the misfortune of working with Grumps? What Grump warning signs have you seen? Let us know in the comments below.
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
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.
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.
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.
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).
Malte Spitz is a member of the Bundestag, the German parliament. He sued mobile operator T-Mobile to get their records of his cell phone activity for a six month period in 2009. It came in an Excel spreadsheet with 35,851 rows.
Zeit Online, the digital imprint of Germany’s top-selling weekly newspaper, Die Zeit, combined this data with other information about Hr. Spitz’s life which they gleaned from social media and publicly available online sources.
“Each of the 35.831 rows of the spreadsheet represents an instance when Spitz’s mobile phone transferred information over a half-year period. Seen individually, the pieces of data are mostly inconsequential and harmless. But taken together, they provide what investigators call a profile – a clear picture of a person’s habits and preferences, and indeed, of his or her life.
This profile reveals when Spitz walked down the street, when he took a train, when he was in an airplane. It shows where he was in the cities he visited. It shows when he worked and when he slept, when he could be reached by phone and when was unavailable. It shows when he preferred to talk on his phone and when he preferred to send a text message. It shows which beer gardens he liked to visit in his free time. All in all, it reveals an entire life.”
To model what they mean, Zeit Online produced this interactive map.
This is Big Data in practice.
I will leave it to other commentators to discuss the political, legal and ethical issues raised by Big Data. I am going to assume, instead, that it is here to stay and that it will increasingly affect our lives.
In my next post, I will develop further some ideas about how Big Data will affect Marketing.
If Big Data delivers what it promises, then the implications for Marketing – and indeed, all of business – will be profound. Before we can understand what these implications might be, we first need to understand what Big Data actually is.
Big Data makes big promises. But many of these promises have been made before, with, for example, data warehousing (and the famous beer and diapers story). What is different this time, and what difference will it make?
I believe, however, that most of us with a business perspective need a definition which enables us to think about the value and uses to which Big Data might be put. My stab at doing so is below, borrowing freely from excellent recent articles by Hung Lee (Big Data is Not ‘Lots of Data’) and Alex Cocotas of Business Insider.
Big Data is not (just) big data
What makes Big Data interesting is not the the size of the data sets (although these can be mind-bogglinglybig). The value of Big Data is much more about the kinds of data which it embodies, and (particularly) the uses to which it can be put.
Big Data is unstructured data.
Big Data is not that which fits neatly into a relationship database or which can be categorised by tags (although it may well contain data of this type). Big Data is a hybrid mashup of different kinds of data such as geolocation, contextual data, telemetry, life events, video, demography, social media and more. It’s messy, complex and has fuzzy boundaries.
Big Data is behavioural, not attitudinal.
It is about what people do, not what they think. Big Data is not, for example, about focus group findings or survey results.
Big Data is about small interactions.
Big Data might include transaction information, such as what is in our shopping trolleys – but this is a known game and is only an adjunct to the important stuff. Important stuff? What we do before we put things into our trolleys. Where we have walked. Whom we have met. What we do for fun. What the weather is like. What we are wearing. What everyone else is doing. The TV channels we watch. You know: the small stuff we do all the time.
Big Data changes. All the time.
Big Data is gathered continuously, in real-time, often from millions of dynamic sources. This means that at any time, we can only have a snap-shot of this continuing river of data. By the time we look at it, it’s already changed.
Big Data is online, mobile and the real world.
Big Data is credible because Google and Amazon and (a very few) others have been able to farm and use complex online customer behaviour data to make serious money. Now mobile is changing the game. Those of us with smart phones use them everywhere. We use apps to help us in the physical world. We use services like GPS and geolocation which note everywhere we go. Now when we turn on our mobile phones, we create data about our behaviour in the physical world in ways comparable with the data we create online. What do we call this melange of online, mobile and physical information? Big Data.
Big Data is informational debris.
Big Data is what we throw off when we do other things. When we stop what we are doing to fill in a form, or have our picture taken or scan some stuff to get ourselves registered or updated – that is not Big Data. Or if it is, it is only a small part of it. Big Data is what we leave behind us when we play games, or take pictures, or move house, or phone someone up, or browse around a shop, or go for a run or change the channel. It is a side effect.
That’s my shot at defining it. Does this work for you? What have I missed or got wrong? Let me know.
If Big Data keeps its promises, the implications for all of business – but especially Marketing – are profound. I will explore some of these implications in my next post.
This series of posts arose as a result of a panel discussion earlier this week at IQPC’s CMO Exchange event at St Albans. I had the pleasure of sharing the platform with Paul Blacker of BT and Michael Woodburn of Capital One, and it was admirably chaired by my old chum Vincent Rousselet, CEO of the Strategic Planning Society. Our conversation offered a good range of views on these questions. These opinions I express here, however, are entirely my own.
“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)
They may be right. The good folks at HCL have been making this point for some time and attribute their startling growth to an “Employee First, Customer Second…” approach. In 2010, their CEO, Vineet Nayar, even wrote a book about it in 2010.
Unusually for a CEO these days, at the time of writing some three years later, Mr Nayar is still in post and the HCL stock price appears to be doing very well. Perhaps there is something in what he says.
The core idea, I think, is this: employees are the company. They make the difference for customers. If they are happy, motivated and enabled to succeed, then a good customer experience may be possible. If employees are unhappy, unmotivated or not equipped to succeed, then nothing we try for the customer will really make much difference.
It is in our control
For those of us interested in customer experience transformation, this perspective offers another potential bonus: while we cannot manage our customers, we can and should manage our people. The challenge of working with our people to make things better for customers is in our hands, no-one else’s.
I believe that how company drives its people to make things better for customers indicates whether a company regards the customer experience as an overlay on their “core business’ of selling, shipping and service – or if their approach to customers reflects serious strategic intent.
“One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to.”
Proactive customer experience is a strategic choice
This idea of proactivity is the whole game, right there. Organisations which are serious about the customer experience proactively drive their people to seek to make things better before customers see reasons to complain.
Sure, there are companies which are doing good things by listening to customers and putting in improvements to fix things which customers don’t like. This work is valuable, and good, but it does not address the real challenge. If we simply fix things about which customers complain, then we are playing catch-up. We are saying, in effect: “we aspire not to make customers unhappy.”
The difference is in the bottom line. Jeff Bezos again:
“Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.”
Customer experience is much more than fixing things for customers. It is about making a strategic choice to be proactive in making things better for customers, it is about reflecting this choice in the ways we guide and enable our people to make things better for customers – and it is about doing so because it is the most effective way to grow and sustain the bottom line.
How do our companies measure up?
(Image credit: Ministry of Information Photo Division Photographer [Public domain or Public domain], via Wikimedia Commons)
Everything that surrounds us was once a dream that someone made real. What do we call the people who turn such dreams into reality? Leaders.
Mike and the Customer 
