The best leaders in my life asked more questions than they gave answers. Too often we jump to prescribing. We feel we know what customers want. We believe we know the answers. But the real difference between an “everyday” company and a “beloved” company is how they answer questions. How they make decisions. It’s the intent and motivation that guides decision making that separates these companies from the rest.
Here are five of my favorite questions from my book, “I Love You More than My Dog: Five Decisions that Drive Extreme Customer Loyalty in Good Times and Bad.” In this post I will cover the first three questions, and in the second post, I’ll give you the second two and some actions to take back and work through with your organization.
Question 1: Do You Consider Customers an Asset or a Cost Center?
The everyday company thinks about their business as getting sales out of customers. That’s the name of the game. The beloved company understands and believes that the real goal of the business is to grow the asset of the customer base. And to grow their customer base, they employ practices that “earn the right” to growth. For example Zane’s Cycles in Connecticut knows that the lifetime value of every customer is about $12,500 – if they punctuate the experience correctly and honor the customer. This belief motivates Zane’s to abolish “bad profit” practices, such as nickel and diming customers on services. They instead invest in the relationships. One of the greatest examples of this is that they have a pat rule that anything a customer needs that costs a dollar or less, they always give away.
To believe in your customers as the asset of your business, you need to be able to measure that asset. One of the first actions we always take when we begin the customer experience transformation journey with clients is to quantify the value of customers. Initially, this is a culture and alignment exercise: to gain agreement on what is a “new” customer and what is a “lost” customer, and to agree on how we assign value to customers. That in itself is powerful cross-silo work critical to your experience transformation. Then, we work inside the company databases to align the data to enable us to do the “customer math” to know incoming and outgoing customers each month. We often kick-start this focus by having leaders begin each meeting with the growth or loss of the company’s ability to manage the customer asset. Only when you begin to think this way, will you rethink policies, processes and commitments regarding growing your business from a customer perspective. Where are you in this process? Do your leaders commit to viewing and managing customers as an asset of your business? Is your customer data clean and consistent enough to get an accurate measure of customer value?
Question 2: Do You Know Your Customers?
Frequently product development, or process or engineering decisions are made inside conference rooms. We need to understand our customers’ lives to serve their lives.
Understanding how your customers go through their day, how you intersect their day and what motivates their behavior in interacting with you are the keys to building an operation that pulls customers back to you. ZARA, a retailer based in Spain has designed their complete product manufacturing process around knowing their customers, around tracking their buying habits, and around hard wiring customer listening into their sales cycle. They employ over 200 designers to keep the fashion cycles fast because they know that’s what their customers desire. This operational commitment enables ZARA to get a new product into the stores within 15 days when the requests warrant it. As a result, their customers go into their stores an average of 17 times a year. 85% of Zara’s merchandise sells at full price.
How much do you know about your customers’ lives and what makes them tick? Are you out in the field talking to them and understanding their habits? Do you watch their buying, service and support habits inside your database? And most importantly, have you used that knowledge to define your operation, your processes, your goals and your staff?
Question 3: How Proactive Are You?
We have all invested a great deal of time in our businesses on IT recovery systems. We know when our systems shut down, we have back up plans, we know who to call and when, and we have clear processes to put all this into play when the inevitable (sorry IT) happens.
Why don’t we have this same type of full blown recovery processes for saving customers in distress?
Most organizations know failures will occur from time to time. But most companies don’t plan with rigor on how they will reach out to customers, how they will engage the organization to decide on a response, and how they will decide on the gestures and support for the frontline that interacts with customers in distress. Southwest Airlines is an exception. Every day they convene something called a “Morning Overview Meeting,” or a “MOM” meeting where they review every flight that went out the day before. They know what flights were disrupted and by how much time and know which customers were impacted. After the meeting a team called the “Proactive Customer Service Team” goes to work to reach out to these customers – before the customers reach out to Southwest. Southwest Airlines earns the right to keep on flying profitably when other airlines falter because of this type of proactive decision making. Over 70% of customers contacted through this process return – with additional passengers on the airline.
So how proactive are you? What would it take to become a proactive customer company? Are you ready to engage cross-company operations to unite their view of the customer experience so that you can see how your customers are experiencing your company? Can you align that information across your operation so you can make decisions based on knowing customers with repeat customer service calls, customers with disrupted services, or customers on the verge of leaving you? Investing in this type of proactive service is often what is cited by the most loyal customers. In fact research proves that if you make a mistake and correct it in a manner that honors your customer, you have a stronger relationship than if you had not made a mistake.
I had the pleasure of recently speaking on a webinar, where I discussed these five decisions. If you’d like to hear that webinar, please go to www.informatica.com/customercentricity
