Customer Partnering: Proactive, Vital, Winning CEM

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In his thoughtful and incisive 1996 book, Customers Mean Business (http://www.torontopubliclibrary.ca/detail.jsp?Entt=RDM2336412&R=2336412), James Unruh, former chairman and CEO of Unisys Corporation, said: “…partnering with customers promotes a deeper understanding of customer concerns and of areas for improvement. Partnering relationships can create a seamless interface between an organization and its customers.”

Those are profound words; and, almost 20 years after the book was published, this continues to be a significant, and even basic, concept for any company endeavoring to create an optimal level of customer loyalty behavior for itself. Smart and evolved companies create value in partnership with customers, and value is as likely to come from people and information/content as it is from products and services. If companies practice new ideas, such as ‘creating interdependence’ and ‘building equity’ with their customers, they are strategically differentiating themselves from competitors. They are also creating ‘barriers to exit’, making it more difficult for their customers to leave and begin a relationship with a new supplier.

The idea of customer partnership is not new. Japanese businesses have used similar techniques for decades in process design and redesign. With the increase in customer focus, partnering has taken on added dimension in recent years. Companies like Chrysler actively use customers to help in the design of new vehicles. Southwest Airlines includes customers on teams involved in staff hiring. Preston Trucking, headquartered on Maryland’s eastern shore, has a Quality College, adapted from Japanese concepts, where customers, non-customers, and Preston staff have a forum to evaluate operating methods. Companies like John Deere send staff to customers’ sites to learn, first-hand, how their products are being used and where better support can be provided. They return from these visits with customer-sensitized insight which is applied to many areas of process improvement.

Some sales types may view partnering as just another word for bonding, or establishing closer relationships with customers. It’s considerably more than that. In many customer-supplier relationships, the interactions can be somewhat adversarial, with one side winning or losing the bargaining war to get the best deal for themselves. Partnering requires rethinking this type of relationship, and focusing on mutual investment and the potential for mutual benefit, in other words creating ‘win-win’ situations.

Several years ago, the new vice president of AT&T’s NCS group saw significant declines in their business. NCS is the division that services all of AT&T’s computers and local area networks. This is not a captive service business, because the NCS customers have the right to go outside, self-maintain their equipment, or use NCS. NCS had been conducting customer satisfaction research, but the vice president discovered that almost one-third of the customers who reported being satisfied were potential defectors.

The vice president saw that he would have to go beyond understanding the customers’ needs and hoping that that level of insight would help create loyalty to NCS. Out of this recognition came a unique approach to customers, where they were encouraged to accept part of the responsibility for creating value and benefit for themselves while NCS accepted the remainder of the responsibility, was created. Having created it, NCS then set about training its management and customer service staff to execute partnership arrangements with customers. This was a very different form of customer-supplier relationship for many of NCS’ customers, and it helped to strategically differentiate NCS.

After the first six months of applying partnership agreements to its customer relationships, the division’s revenues were up 20% and its profits were up 35%. Over the next six months, revenues increased to 26%, positive staff perception of dedication and customer focus increased to 85%, and new business soared by 600%.

Another excellent example of customer partnering by an American company is Intuit, Inc., creator of Quicken software for personal financial management, QuickBooks for business financial management, and TurboTax for tax computation. Several years ago, Scott Cook, Intuit’s founder, said:

“Unwavering customer focus, that is exactly what we do at Intuit. We have well over 5 million customer contacts per year, whether on customer support phone calls or through our web site. Our research programs, beta tests, and usability labs put is in touch with thousands more every year to get their input and make our products better.”

Intuit has set up ‘listening posts’ around their company, wherever there is a customer interaction touchpoint – engineering, customer service, and technical support – to capture the voice of the customer. They use these contact points to learn about what customers want and then they apply the information to problem resolution and new product development. This may not seem innovative to some companies, but Intuit has raised partnering to a high art.

For Intuit, partnering doesn’t stop with customers. It extends to employees and strategic allies, as well. Their corporate culture is highly entrepreneurial, enabling staff to be creative and spontaneous, and highly mobile. They feel it’s important that senior managers be flexible and understand the entire business, so training and cross-functionalism are actively practiced. Scott Cook tells the story about suggestions for Quicken a prospective product manager made during the interview process. Two hours later, the prospect stopped back to visit the interviewer. He saw that his ideas were already being applied to a prototype on the computer screen. It’s an example of how Intuit listens to, and actively involves, its employees.

Intuit maintains partnership relations with financial institutions around the world: American Express, Chase Manhattan, Citibank, J. P. Morgan, Banque Nationale du Canada, Wells Fargo, E*Trade, Charles Schwab, Fidelity, and American Century, to name just a few. Intuit works with its business partners on a team basis, seeking solutions where its partners, customers, and Intuit all benefit. One example of this has been the Quicken Tax Freedom Project, which enables millions of lower income Americans to do online tax preparation and electronic filing with the Internal Revenue Service.

Another partnership development has been to connect banking partners with their customers, giving bank customers the ability to conduct their banking and pay bills online using Intuit products. When this was originally written, Intuit had over one million customers using their products online; and they were working with 80% of the largest financial institutions in the United States, representing over 50% of our country’s checking accounts.

A company, in seeking to develop stronger partnership with its customers, should ask several questions:

– How do my customers perceive advantage, solution, and benefit – in other words, value – when selecting a supplier? What are the tangible and intangible elements of that value? These can include technical capability, customer service, prices, product/service variety, integrity and reputation, geographical location, delivery timeliness, product conformance and quality, and many other factors. Also, what are my strengths and weaknesses regarding processes, staff, structure, strategy, culture, etc.?

– How do my customers do business with me? What are the dynamics of their supplier decision-making process? Do I understand how choices, such as share of dollar allocations, are made? What complaints, expressed and hidden, do my customers have about my company?

– What do I know about the competition – who they are, the benefits my customers perceive from them, their ability to partner with my customers more effectively than I can? How can I position my company, and communicate and provide benefit, in a non-copycat manner?

– What is unique and special about my company? What original positioning do I have, or can I create, that would make my best customers want to partner with me? What, if any, operational and relationship modifications do I have to make to achieve partnership?

Partnership is a beginning strategy, and perhaps a new (but fundamental) strategic approach for many companies with their customers. Like any effective loyalty behavior program, it will work best if enacted for the long-term. As Jaggers, the lawyer said to Pip in Dickens’ Great Expectations: “Take nothing on its looks; take everything on evidence. There’s no better rule. ” Quick-fix, tactical, or me-too loyalty and relationship programs often end in shortfall and frustration. That’s the overwhelming evidence. Those companies interested in creating value by partnering with their customers would do well to heed that advice and avoid such techniques. There is no better rule.

Michael Lowenstein, PhD CMC
Michael Lowenstein, PhD CMC, specializes in customer and employee experience research/strategy consulting, and brand, customer, and employee commitment and advocacy behavior research, consulting, and training. He has authored seven stakeholder-centric strategy books and 400+ articles, white papers and blogs. In 2018, he was named to CustomerThink's Hall of Fame.

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