Category: Business Strategy

The 4 Keys to a Customer-Centric Culture

customer centric organizationRetail: Shaken Not Stirred reader Sarah submitted an interesting question for today’s post:

“What does it really mean to create a customer-centric culture ? We hear companies say it all the time. I would wager that almost every retailer claims to have it. But what does it really mean and how do you know if you really have it?”

Culture is a powerful and interesting beast, and I certainly don’t claim to be an expert in developing corporate cultures. However, it’s a topic of great interest for me, and I’ve had the opportunity to observe and operate within many corporate cultures. I’ve learned that corporate cultures cannot be decreed from the top as cultures get their power from all of the people within them. While CEOs and other leaders can be influential in culture development, they can also be completely enveloped by powerful cultures that are driven from all levels of the organization and formed over many, many years.

That said, I believe there are certain dynamics that drive cultures, and we can influence and shift cultures by focusing on these key areas.

Without further ado, here are what I believe are the four key facets of a truly customer-centric culture:

  1. Faith
    Customer-centric organizations believe in an almost religious way that sales and profits are the by-product of great customer experiences. They are unwavering in their belief that intense focus on creating the best possible experience for their customers is the best way to grow their businesses. Some of these organization will go as far as saying sales don’t matter, but that’s not exactly accurate. All businesses need to create profits, but truly customer-centric organizations focus on the customer experience and not on directly “driving sales.” They believe the best way to improve sales is to view them as an outcome of great customer experiences rather than something that can be directly affected.

    I once had the opportunity to meet with Yahoo and Google in back-to-back meetings regarding potential partnerships with my company, and the two discussions could not have been more different. The Yahoo team was very focused in determining how the partnership would increase Yahoo’s revenues while the Google team interrupted us immediately when we began to discuss revenue. They said they were only interested in opportunities that would enhance the Google experience for their users. Period. I didn’t take this to mean they weren’t interested in growing their business. They simply believed that Google’s purpose was to help people find all the world’s information, and they would maximize their revenue by delivering on their purpose in the best way possible for their users.

  2. Fortitude
    Relentless focus on the customer experience is not easy, particularly for public companies. Truly customer-centric organizations constantly have their faith tested by both external and internal forces who are looking for short-term sales or profits, even if those sales and profits might come at the expense of the customer experience. Customer-centric organizations focus on the value of a customer engagement cycle that relies on great customer experience as an engine that drives retention and positive word of mouth.

    There will always be pressure to run short-term promotion to goose sales. It’s not that customer-centric organizations don’t run promotions; it’s just that they run those promotions in context of their larger purposes in service of their customer. They focus on earning  sales and loyalty rather than buying sales and loyalty.

  3. Employees first (even before customers)
    It may seem counterintuitive to say customer-centric organizations put their employees before their customers, but in my experience this is true and this may actually be the most important of the four keys I’m discussing here. It’s a bit like when we’re instructed by flight attendants to secure our own oxygen masks before helping our children secure theirs. All employees play a part in the experiences we provide our customers. Some have direct contact with our customers and others make daily decisions that ultimately affect the experiences our customers have with us. Their attitudes about their jobs and the company can make or break the experience they provide for our customers. This is sort of obvious for front line staff like store associates and call center agents, but it’s also true for site developers, delivery truck drivers, mid-level managers, executives and, frankly, janitors. Even those not on the front lines are constantly making decisions that affect our customers’ experiences.

    Truly customer-centric organizations therefore provide absolutely great career experiences for their employees so their employees pass along the greatness to their customers. While decent salaries are certainly a factor, money alone is not enough. An “employees first” approach means employees are treated with great respect. They’re trusted with the authority to deliver on clearly defined accountabilities. They’re also given clear direction and clear guidelines and fully supported when they make decisions that improve the customer experience.  Colleen Barrett, President Emeritus at Southwest Airlines (a customer-centric organization), also points out that the customer is not always right. There are scenarios where the customer is clearly out-of-bounds and truly customer-centric organizations know when to support an employee over the customer. Watch a brief clip of her discussion at the recent Shop.org Annual Summit for some of her keen wisdom on empowering employees and defining an employee-first, customer-centric culture.

  4. They talk the talk and walk the walk
    As Sarah says in her question, most retail organizations profess to be customer-centric. Those that truly are customer-centric talk about customer experience internally exponentially more than they talk about it externally. Strategic and tactical discussions always center around improvements for the customer. These organizations measure the success of their businesses by metrics that represent the perceptions and voices of their customers. They spend a lot of time and effort ensuring these voice of customer metrics are credible, reliable and accurate, and they focus on them incessantly. These metrics are the first metrics that are discussed in weekly staff meetings from the executive level to the front line level. Bonuses are driven by these metrics, too, but the regular discussion of the voice of customer metrics and the drive to improve the experience on a daily basis is what separates customer-centric organizations from companies that discuss sales first and customer metrics later, if ever.

Are these attributes ideals for a perfect world that aren’t rooted in reality? I don’t think so. Organizations such as Google, Zappos and Southwest Airlines attribute their success to such thinking, and based on some of my experiences with them they seem to be living up to the promise. Is it easy? No way. While earning loyalty may not yield the immediate sales results buying loyalty can, the longer term efficiencies gained through providing great customer experiences can more than make up for the difference.

Those are my observations about customer-centric cultures. But as I said a the beginning of this post, I am not an expert. I’m very curious to hear from you.

What are your observations about customer-centric cultures? Have your worked for such an organization? Did true customer-centricity ultimately lead to solid financial results? What would you add to the keys I’ve listed?

(By the way, this is the first time I’ve had a reader submitted topic for discussion, but I would love to have more. Please email me at kevin.ertell@yahoo.com if you’ve got a topic that would be good for discussion in this space.)

Your moment of Venn

My friend Chris Eagle sent me this cartoon recently:

University expectation Venn diagram

Clearly, the cartoonist was frustrated with some recent visits to university websites. But it’s not hard to apply his Venn diagram to many of our retail website home pages (and many other pages as well).

If we were to diagram our own sites — breaking out our customers’ expectations and our own objectives — what would be contained in our overlap? How often during the internal battles for homepage real estate are customer expectations considered? And when they are, how quickly are they pushed aside when conflicting internal objectives over limited real estate means something has to give?

Does the merchant who’s in our face get priority over the customer who is not?

Assuming we’ve got a list of customer expectations or objectives, how were they determined? Would the items in our “customers’ expectations” circle be our perceptions of our customers’ expectations or would they be expectations gathered directly from our customers? You might say there’s no distinction between the two, but my experience tells me there is often a significant gap. This is because those of us who work on sites day in and day out are about the worst possible people to understand our customers’ perspectives. We simply know our sites and our business way better than our customers ever will, and our knowledge clouds our ability to see our sites and our businesses in the same way our customers see our sites and our businesses.

Oh, yeah. To add to it all, believe it or not, our customers are not of a single mind and a single purpose. It’s hard enough that we’ve got to deal with competing internal interests; we’ve also got to somehow provide a self-service experience for our customers that magically anticipates and responds to their expectations and objectives.

So, these are a lot of questions. What do we do about it?

  1. Objectively understand customer expectations and objectives, directly from our customers.
    This is, of course, not as simple as it sounds. We’re dealing with the human psyche, which is a complicated thing. It’s important we ask questions very carefully to ensure we are getting accurate results. For example, the Myers-Briggs test is a scientifically proven method for assessing personality. If you’ve ever taken it, you know how thorough and accurate it is. The results you get are very different than you would get if you simply asked someone to describe his or her personality. It’s also important that we collect this data properly, ensuring we get a representative sample of our customer base that is statistically valid enough that we can project our findings on our entire customer population. In other words, simply asking the next 15 customers we come in contact with is not enough. When done correctly, customer surveys can be extremely reliable, accurate, and predictive and can give us an excellent view into our customers wants, needs and expectations. It will come as no surprise that I am a huge (and admittedly, biased) fan of ForeSee Results’ ACSI methodology because it asks a series of well-tested questions that have been scientifically proven to draw precise, reliable and accurate information from respondents.
  2. Educate internal constituencies
    Once we understand our customers’ objectives — from their perspectives — we need to educate our internal partners in an effort to align their strategies with our customers’ needs. Ideally, they’re already aligned, but my experience tells me that daily internal pressures have a way of evolving (or should I say devolving) their individual strategies away from customer needs.
  3. Map out a strategy that responds to key personas and/or purposes
    Delivering on multiple objectives requires a lot of thought and planning. Meeting the needs of so many constituencies, customer and internal, can be tricky. I highly recommend reading Bryan and Jeffrey Eisenberg’s excellent book, Waiting for Your Cat to Bark, for some quality advice.
  4. Personalize and customize
    While online real estate is technically unlimited, trying to simultaneously meet too many competing objectives can lead to a chaotic mess. I won’t call anybody out specifically, but surely you’ve see the type of site I’m referencing. Companies such as Monetate and Certona have site personalization capabilities that can take what we know about the customer, where’s she’s coming from, what search term she might have used and even, in the case of Monetate, what the current and upcoming weather in her location is, to help us make some determinations about the configuration and content of the page she might see.

To be sure, filling the overlap circle of our Venn diagram is not easy. But in a world where low single digit conversion rates are all too common, focusing on discovering and then meeting customer expectations is the quickest way to improving business and gaining market share.

What do you think? What fills your Venn diagrams? How do you understand customer expectations and objectives?

Cartoon: XKCD

Blinded By Certainty

blindfoldedIn reality, very little in our lives is absolutely certain. We can be certain the sun will rise in the east and set in the west. We can be certain death will follow life. And we can be pretty darn certain Steve Jobs will wear a black turtleneck and jeans at his next public appearance.

But we’re certain about a lot more things than we should be.

A recent University of Michigan study by Brendan Nylan and Jason Reifler shows that the more certain we are about particular ideas or situations the more we become blind to facts that discredit our certainty. In fact, in many cases opposing facts are not just ignored but actually strengthen our prior beliefs.  A recent Boston Globe article provides an excellent summary of the research.

From the article:

Most of us like to believe that our opinions have been formed over time by careful, rational consideration of facts and ideas, and that the decisions based on those opinions, therefore, have the ring of soundness and intelligence. In reality, we often base our opinions on our beliefs, which can have an uneasy relationship with facts. And rather than facts driving beliefs, our beliefs can dictate the facts we chose to accept. They can cause us to twist facts so they fit better with our preconceived notions. Worst of all, they can lead us to uncritically accept bad information just because it reinforces our beliefs. This reinforcement makes us more confident we’re right, and even less likely to listen to any new information.

Both the research and the article focus primarily on our political viewpoints, but while reading I couldn’t help but think of people I’ve come across in the business world who were unbelievably certain about their viewpoints based on information or experiences that seemed less than obvious to me. I immediately thought of dozens of people, and I bet you’re thinking of many such people now.

In fact, it was so easy for me to think of other people that fit the bill that I couldn’t help but think the man in the mirror was not immune to this universal human fallacy.

In my experience in the business world, we often assume with undue certainty that past experiences will reflect future possibilities. We say things like, “We tried that before and it didn’t work” or “I know what our customers want.” While our past experiences are extremely valuable and are very important for informing future decisions, we simply don’t have enough of them to blindly ignore changes in circumstances, timing and other variables that could significantly alter results for a new effort.

So how do we overcome our natural instincts in order to make better business decisions?

  1. Be aware of the problems with certainty
    You’ve read this far, so maybe you’re awareness is already active. I know that I am reassessing all the things I “know” to try to truly separate what is fact and what is assumption. I very much value all my experience, and I know I make better decisions because of what I’ve seen and heard along the way. But I want to make doubly sure that assumptions I make based on past experiences are tested and validated before I turn them into absolute fact.
  2. Actively seek alternate points-of-view
    In my experience, the combination of multiple experiences provides a much more solid foundation for decision making than basing decisions on singular past experiences. Techniques I’ve used, like The Monkey Cage Sessions, are based on the incorporating viewpoints from people in different functional areas and levels of the organization. While it’s acceptable to discount data or opinions that are in opposition to a decision I might make, I want to be sure I’m not simply rationalizing opposing information or viewpoints solely because they are different from my biases.
  3. Envision alternate scenarios
    I addressed this some in a previous post, “Obscure and pregnant with conflicting meanings”, where I discussed a technique I called “Scenario Imagination.” I’ve since read an excellent interview with Daniel Kahneman and Gary Klein where they detail a similar and better technique they call “pre-mortem” (which is also a better name than mine). Whenever we make decisions, we have a tendency to assume our decisions are going to produce the best possible results. These pre-mortem techniques have us imagine worst case scenarios to try to dissect potential problems before they occur.
  4. Be flexible and plan for contingencies
    Once we admit we’re not 100% certain, we can move forward with plans that are flexible and able to react to changing conditions. To be clear, I’m not saying we should just be wishy-washy and not make clear decisions. What I’m saying is that we should be open to new facts and be sure we have created an environment that allows us to change course when warranted.

If we’re aware of our certainty biases and take active steps to address them, I believe we can significantly improve our decision-making in our businesses.

What do you think? Upon self-examination, have you turned beliefs into facts in your mind? How would you suggest addressing these biases? Or, do you think is all a load of hooey?

Don’t let your brand go LeBron

In case you missed it, last week NBA superstar and Cleveland-area native LeBron James elected to leave the Cleveland Cavaliers in favor of the Miami Heat. He announced his decision midway through an hour long, nationally televised special conceived by his team of personal advisers. It all came across as incredibly self-absorbed and spectacularly anti-fan as he essentially broke up with Cavaliers fans in front of a national audience. He repeatedly referred to his decision as being about “business” and hoped his fans would understand.

But they didn’t understand.

When shown an image of fans burning his jersey, James seemed temporarily startled before stating that he couldn’t “get involved in that.” His Sports Q rating, which determines an athlete’s popularity and advertisers use to determine whom to endorse , was the highest in the NBA pre-announcement, but it’s sure to take a hit now. In fact, this post calculates a drop in Q score could cost him as much as $150 million.

But what does this all have to do with retail?

I think there’s a lesson we can all learn about dangers of making business decisions without fully considering the effects of those decisions on our customers. After all, our businesses wouldn’t exist without our customers, and we continue operations at their pleasure.

We’ve probably all been in those meetings where a suggestion motivated by self-interest groupthinks its way into a spectacularly anti-customer business decision. I imagine that’s the type of meeting that occurred with LeBron and team when they hatched the national TV special idea.

A retailer colleague of mine recently told me a story of such a session at his company. The head of the call center was complaining about volume spikes that kept hitting the call center. Her call center operations were deemed a cost center, so the metrics she used to measure her operation were all cost related. These spikes in volume were jacking up her costs, and she was making a lot of noise about it. My colleague noted the spikes in volume were following promotional email blasts that were widely considered very popular because they drove a lot of sales. No one would even consider stopping those emails, so the group began to latch on to the idea that they simply close the call center on days when the promotional email went out. Seriously. Luckily, my colleague was able to pull the group back from the brink and save them from going LeBron. But it was close.

We have to be careful that we don’t get so caught up in our own perspectives that we lose sight of our customers’ perspectives. Because we have direct control over the experience we provide, it’s sometimes easy to let that control be dominated by our own needs without considering the needs of our customers. When that happens, we’re seriously in danger of going LeBron.

Consider a few potential scenarios:

Does your company’s loyalty program makes its rewards intentionally difficult to redeem in order to reduce costs? If so, you might be going LeBron.

If your return policies make your job easier while making your customers’ returns a lot more difficult, you might be going LeBron.

If you promote a sale of up to 70% discounts and bury only an item or two at 70% off within a sea of items that are less than 20% off, you might be going LeBron.

If you choose to leave in place an onerous process for customers to check the status of their orders because it saves you time and money, you might be going LeBron.

Whenever our needs get way out of line with our customers’ needs, we’ve got a business problem that could be deadly. We provide products, services and conveniences that our customers value enough to give us their hard earned cash in exchange. But the relationships we have with most of our customers are somewhat fragile. When we make business decisions that are primarily motivated by our own self interests (especially those motivated by some subsection of our businesses and driven by short sighted personal motivation), we risk potentially fatal damage to many of those relationships. We don’t want be caught startled that our customers are burning our jerseys. We don’t want to go LeBron.

Instead, we can best succeed by regularly considering our customers’ needs and desires when making business decisions. Such consideration will help us maximize the customer engagement cycle and lead us to solid and profitable growth.

What do you think? What examples have you seen of companies going LeBron?


The Monkey Cage Sessions

monkey throwingI’ve seen a lot of strategies and “solutions” fail over the years primarily because the solution was crafted before the problem addressed was thoroughly understood.

Many times, the strategy or solution was the result of a brainstorming session filled with type A personalities (me included) ready to make things happen.

You may be familiar with the type of session I’m referencing. Usually, there’s a guru consultant leading the charge. He separates the group into teams and gives them Post-It notes and colored sticker dots. “Write down as many ideas as you can in the next 20 minutes. Don’t think too much. Be creative! No idea is dumb. Stick your ideas on the wall. Now go!” After 20 minutes, a leader from each group presents their best ideas to the rest of the room. Then each person in the room is allowed to vote for maybe six of his or her favorite ideas using the colored sticker dots. A few people are assigned the winning ideas and off we go.

Those types of session frustrate me. I’m concerned there’s too much action, too many unspoken assumptions, and not nearly enough serious thinking.

Over the years, I’ve developed a problem solving technique that I’ve found to work a lot better. I call it the Monkey Cage Sessions. The technique is all about thoroughly identifying the problems from all angles before developing carefully considered, thoughtful and collaborative solutions.

It’s got an intentionally silly name because the process should be fun.

Here’s how it works:

Step 1 Define the problems.

We start by gathering a group of cross-functional people – ideally from different levels of the organization – together in a room to talk about the problem or problems we’re trying to solve. This could be as simple as enhancing a Careers page on the corporate website or as complicated as building a complete company strategic plan. It’s important to define the general scope of the problem, but it should be defined fairly loosely so as not to stifle the discussion.

The rules of the meeting are fairly simple. We only discuss problems. No solutions. This is a license to bitch. Let it be cathartic.

I usually stand at the whiteboard, marker in hand, and write down everything everyone says. There is no need to be overly structured here, and anything anyone says is legitimate. We throw it all at the wall and we’ll sort it out later.

Sometimes people want to debate whether or not something another person says is really a problem. If someone said it, it’s at least a perceived problem. It’s legitimate. Also, there is often an attempt to offer an explanation for why a problem exists. The explanation is covering for another problem, so that problem should be written down.

People are always tempted to offer solutions, even when they think they’re offering problems. For example, someone might say it’s a problem that we don’t have a content management system. Actually, a content management system might be the solution to a problem. What problem might a content management system solve? Beware of any problem statement that starts with “We need…” and be prepared to break down that need into the problems needing the solution.

Sometimes the problems offered up are very broad and vague. In those cases, it’s important to work with the group to dissect that broad problem into its component parts.

This first session generally uncovers a LOT of problems, but the problem is still usually not completely identified yet. Which leads to…

Step 2 Categorize the problems

While the chaotic approach of the first session works well to get an initial set of problem descriptions, it’s important to create some order in order to prepare for the problem solving stage. So Step 2 involves writing down all of the problems and sorting them into logical categories. I don’t have any pre-determined set of categories. Instead, I prefer to the let the problems listed dictate the categorization.

Step 3 – Widen the circle

We probably have a pretty good description of the problems now, but we’ve also still likely missed some. For Step 3 we send the typed and categorized list of problems to the original group as well as a widened circle of people. The original group will likely have thought of a couple more issues since the day of the meeting, and the new group of people will almost definitely add new problems to the list. Since this is the final stage of problem description, we want to give this step at least a few days to allow the team to think this through as completely as possible.

Step 4 – Develop the solutions

Finally, we can start solving the problems. Woo hoo!

Now it’s time to gather a subset of the original meeting to start working towards solutions. There should be at least a few days between Step 3 and Step 4. We want to give people some time to think over the full problem set. The group should enter the Step 4 meeting with at least some basic solution ideas. There is no need to come into the room with comprehensive solutions that solve every problem on the list, but the solutions considered should certainly attempt to solve as many problems as possible (without causing too many new problems).

I usually find that by this point many of the solutions are fairly obvious. But there should be good discussion about the relative merits of each suggested solution, and the solutions should be measured up against the problem list to determine how comprehensive they are.

I like to end the meeting by assigning people to lead each of the proposed solutions. Obviously, any suggested solution from this session will need to be fleshed out in a lot more detail, and the leader from this meeting is responsible for determining the viability and solution and then potentially leading the development and ultimate execution to completion.

Subsequent progress is then handled via a separate execution process.

———————————-

I’ve had very good luck over the years using this technique. Some of the primary benefits I’ve found are:

  1. Better understanding of the problems
    As the initial meeting wraps up, most people are inevitably feeling enlightened about the problem. They’ve outwardly expressed their own assumptions (which sometimes even they didn’t know they were making) and they’ve understood the perspectives and assumptions of others. They’ve seen the problem in an entirely new light.
  2. More comprehensive solutions
    The heightened understanding of the problem and the critically important time between steps to allow the team to be more thoughtful in their ideas. Those ideas are usually pretty all-encompassing solutions to start with, but the discussions in Step 4 lead the team to collectively choose the best of the best of the solutions offered.
  3. Better execution
    Solutions are nothing but fancy ideas until they’re executed. And poor execution can cause even the best ideas to fail. The process of fully defining the problems and sharing that work with wide circles of people is an incredibly important stage that sets the foundation for success in execution. When the execution team provides input in the process and understands the basis for the solution, they are far more supportive in the effort. They are also far more prepared to make the daily, detailed decisions that are often the difference between success and failure.

So, that’s the Monkey Cage Sessions. I hope you find it helpful. If you try implementing the process in your business, I’d love to hear how it goes.

What do you think? Would this process work in your organization? Have you ever used a similar process?


Retail: Shaken Not Stirred by Kevin Ertell


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