Who Owns Customer-Centricity?: A Round Table Discussion

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It’s easy enough to set a goal of making your company customer-centric. But how do you get everyone on the same page? Who provides the leadership, the board of directors or the CEO? CRMGuru.com founder Bob Thompson and Gwynne Young, managing editor, met with three experts to tackle the subject: David Rance, a managing editor of Round; Evan Levy, partner and co-founder of Baseline Consulting; and Cathy Burrows, director of enterprise information and customer management support at RBC Centura Bank, a division of RBC Royal Bank of Canada.

The round table took place Dec. 8, 2004. The transcript below was edited for clarity and length.

A definition
CEO’s purview
Metrics
Ownership
Employee alignment

Gwynne Young
OK, why don’t we start with you, David? Why don’t you introduce yourself and tell us a little bit about Round?

David Rance
I’m calling you from the depths of Mangalore at 10:30 at night, so our customer service really hit the road here. I’m in the middle of a call center. I’m managing director of a company called Round. We are kind of a product company and partly a consulting company. We develop tools to help organizations understand how customer-centric they are or aren’t and help them guide their planning and their investments to become more aligned and hopefully, more customer-centric. So, the whole focus of our business is around customer-centricity, rather than CRM.

Gwynne Young
Great. Thank you. Evan, how about you?

Evan Levy
I’m a partner with Baseline Consulting. We focus on data integration, business analytics and data warehousing for our clients. Inevitably, that means helping them solve their business problems with data. The better they can understand their customers and use that data, the better they can act against helping their customers.

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Gwynne Young
Cathy, you’re our representative of the customer community—or the business community, in this case. Why don’t you introduce yourself?

Cathy Burrows
I’m the director of enterprise information and customer management support at RBC Centura Bank in North Carolina, which is a division of RBC Royal Bank of Canada. My role, in this instance, is to actually put together the information that we’re going to need in order to support our customer management strategies at RBC Centura. I have had about 15 years’ experience in the Canadian financial services world doing exactly that with RBC Royal Bank.

A definition
Gwynne Young
Let’s start with you, Cathy. What does it mean to you to be customer-centric, and why should senior managers or board members care?

Cathy Burrows
Gee, I was hoping you were going to start with somebody else, but I’m happy to take a crack at it, Gwynne. I think that being customer-centric is fundamentally what the business is about. Having been in financial services for about 15 years, I can say that at the end of the day, what we have as a business is our customers. Our ability to understand those customers; what their needs and expectations are; and what our capabilities are to deliver against those in a profitable way is how we maintain the business.

So, customer-centricity is at the core of how financial services—certainly, the financial services I have to operate in—have to manage in order to retain, grow and acquire customers, as well as manage the costs associated with them. It’s what delivers the bottom line.

Gwynne Young
Evan, can you build on that?

Evan Levy
Well, I think the real issue on being customer-centric is making sure that you’ve got your eye on the target of what your company does. I mean, it’s really quite fascinating, I recently read an article about GM—General Motors—being described as really a financial institution that sells cars.

Gwynne Young
Sure.

Evan Levy
In reality, that’s the way it might look from a bookkeeping perspective, but without customers buying products, nothing else happens. So, it’s important for companies to realize, you know something? We’re here to sell product or services to customers, and all the other things support that. It’s not the other way around.

Gwynne Young
David, do you find that businesses forget about that or that they’re looking at the bottom line too much?

David Rance
Oh, it isn’t just the bottom line. I think they’re very introspective. I just spent three days in a management off-site for one of the world’s famous brand names, and although the customer came up in conversation, it was very much about the metrics support in the customer experience, rather than the customer experience, itself. I have an operations background in customer care and marketing and sales, rather than consulting. Why I ended up in this business at all is because I tried to run a customer service organization, and I foolishly thought that customer service were meant to be servicing the customer, and it wasn’t; it was meant to be optimizing the costs to serve, which is very different. So, we have a definition of customer-centricity.

Gwynne Young
What is that?

David Rance
It’s really about creating alliance and consistency at all the touch-points across a business to maximize neutral customer value. It’s more about walking the talk than anything else, and it’s about consistency. We see a lot of companies trying to become more customer-centric just by changing a strap-line on their brand or by changing their advertising or saying they’re going to be more customer-centric. But, actually, it’s about the consistency across the business. To be honest, the customer—like the people who service the customer—can see the gaps very, very quickly, and they can see the inconsistencies. I’ll give you an example. One of the brands in the U.S. that purports to be very customer-focused is Wal-Mart.

My own personal experience with Wal-Mart is it’s a supermarket that has a price proposition, which they’ve kind of coated with this customer-centricity thing, customer service, to be more precise. But, you know what’s you know what’s very interesting about Wal-Mart? They wear these bibs, and on the bibs, it says, “Can I help you?”

Gwynne Young
Right.

David Rance
But, it’s written on the back, not the front. I’ve asked Wal-Mart why this is. And first of all, most people haven’t realized it, which is quite amazing, and no one could answer the question. If it’s on the back, this person’s got their back turned and is walking away from you. It should be on the front.

Gwynne Young
So, having their greeter at the door doesn’t make them customer-centric?

David Rance
Well, I think it’s a token, and if you’re asking why an organization should be more customer-centric, there are some pretty key reasons. One is, I don’t think today you’ve got much of a choice, because there’re too many companies trying to get this right. So you’re going to be differentiated for the wrong reasons. And it’s going to be, ultimately, about retaining your best customers and your best people, because there’s a synergy. We were talking today about the correlation between customer experience metrics and employee experience metrics, because they are very interdependent. Good people, like good customers, go to the good brands where you can create good experiences, and they can only do that if their capabilities are aligned across the business. If you’ve got an organization which says one thing, and when you get inside, it’s very different—either as an employee or a customer—you don’t stay.

Gwynne Young
So, it starts at the top, and if it doesn’t filter down, your customers aren’t going to be happy?

David Rance
I think the worst thing you can do is set expectations you can’t deliver across the business, and as you know, because we’ve been in dialogue about the use of analytics, they’re quite dangerous. It’s like a new tool which makes you go off and do something and which maybe I can’t execute in the way that would give me permission to use that level of customer insight in, for instance, the use of campaigns. Or where you call a call center, and they suddenly tell you something about your own data that you didn’t think they knew about, and it really starts off the wrong customer experience. It doesn’t drive loyalty. To me, customer-centricity is about how you create raving fans of your organization. And that comes from a combination of things, mainly about consistency and trust and engagement.

CEO’s purview
Gwynne Young
We’re going to get more into the metrics and rewards near the end of our discussion, but why don’t you start off the next question, since I think it goes right into that: What should a CEO do to insure that CRM is really a business strategy and not just a slogan?

David Rance
Yeah, that’s a very good point, and I think the research we did with Bob, gosh, all those years ago suggests that CRM is often seen as a marketing strategy or a data strategy or an IT strategy. It’s not really a customer strategy. And I think the first thing that a CEO should do is have a clear vision of where the business is going and understand how to drive that vision and the goals of the business through the organization to create that consistency end to end. He should be asking for measures or definitions of what the customer experience is: How do we create it? How do we know we create the right experience, and how do we make it aligned and consistent? And how do we engage the customer in the process—and our people?

One of the key questions we ask is: How far can you change a customer process within a business? And, most CEOs don’t know the answer to that, and they should, because that’s one of the key tell-tale signs from a customer perspective of how flexible this organization is. Are they really engaged with me? Or is it like Wal-Mart, where I don’t know the answer and I’ve got no mechanism to feed that back into the business?

Bob Thompson
But, David, I think you’re saying that the CEO needs to get down into a bit more of the details. How many of them are really going to do that?

David Rance
I think they need to drive their strategy down to the business. Very large companies have admitted that they’re very good at strategizing and having goals at the high level, and they’re quite good at operational planning down at the bottom, but the two are not connected. There’s no execution through the business.

Bob Thompson
So, you think they should make sure there is a connection?

David Rance
I think they should understand how their planning process drives the objectives they’re setting and make sure that they are walking the talk. One of the key things is to understand how aligned their objectives are, their vision of the business, their market differentiations, the goals they set, the way they plan and manage the business. And, it covers each culture they have: Are they aligned? And, most companies couldn’t tell you that, and yet, they ought to, because if you don’t walk the talk at the executive level, it’s really difficult to execute that consistently through the business.

Gwynne Young
Evan, do you work with the CEOs or do you work with people just underneath?

Evan Levy
Actually, I work with both CEOs of mid and large companies, and I think the thing that I’m struggling with, to use the Wal-Mart paradigm, is I think you need to take a look at what the company perceives their partners to be and the relationships they can effect. In the Wal-Mart example, the issue for them is not customer intimacy. In fact, I’ve worked in Rogers, Arkansas, at Wal-Mart a great deal and have also worked at Target and Kmart and several other retailers. The real issue becomes: In that particular space, Wal-Mart has intimacy with their suppliers. In fact, they know, on a first-name basis, who the lead individual is from each supplier company, and they have co-location both onsite and offsite. Their issue is: We will appeal to those customers that are looking for the best price. It’s not about a relationship with them; it’s about them looking to us as always getting a quality product at a reasonable price.

However, when it comes to identifying a supplier problem, a distribution problem, a product issue, they’re very aggressive. They know in under three minutes when a product’s been sold and moved out the door for a replenishment system, so the type of customer that goes to Wal-Mart is entirely different than a Neiman-Marcus.

Now, someone like Neiman-Marcus is very, very in tune with what the individual purchase is, to the point where, when you see their catalog and they have items that exceed six figures in cost, they’re putting that item in the catalog for two purchasers. So, clearly, that’s a much higher level of customer intimacy. But the way they handle their partner side is much different. The thing that, I guess, in my mind, a CEO needs to be identifying is: Here is how I am held accountable. In most instances, a CEO is not held accountable by customers. They’re held accountable by shareholders.

Gwynne Young
Right.

Evan Levy
And, they have to establish a strategy and hold their individuals responsible for delivering. Now whether it’s a Smith+Noble that’s a $300 million company or Cornerstone Brands, or Current, which is a check and printing company, or somebody like G.E., those executives establish the goals and initiatives.

Now, in some instances, CRM does get a high level of attention, and the companies benefit from it. I don’t think it’s an issue of forcing every CEO to understand the value of CRM. It’s for those CEOs who understand the value of customers to embrace CRM and then hold their people accountable. It’s what’s so critically important, and I absolutely agree with what’s been said. At that point, you do have to walk the talk. It’s not about a subtitle to your brand or a nice little campaign. It’s about integrating an execution across the board: What is it that we’re trying to do?

David Rance
I think that’s the point I was trying to make, it’s not that Wal-Mart should be like, I don’t know—

Evan Levy
Well, Target, Mervyn’s, Kmart, whatever.

David Rance
It’s that they should be consistent.

Evan Levy
Yeah.

David Rance
If their customer base and their proposition is largely price and it’s a good brand and it sells experience, then if you set expectations that are higher than that and you don’t deliver, you damage the brand.

Evan Levy
Well, that’s a very fair remark. I would agree with you on that one.

Cathy Burrows
And I think the other thing that we know pretty clearly is that there are very few organizations in any particular industry that are going to be able to establish their dominance, whether it’s price-based or, in financial services, pricing based on rates. And so, there are few people who can occupy the No. 1 positions associated with that value proposition and consistently deliver it. The point is that other businesses are only going to be able to differentiate themselves by the level of what they choose to achieve, in terms of that customer relationship.

Evan Levy
Your points, I think, are very valid. If you go back a few years to Toys R Us, you actually used to see the reps inside the store walk around with a T-shirt—black T-shirt, white print—that said, “How Can I Help You?” And, the real issue was, while they were well-known to be very supportive of the client who was coming in the door, the thing that killed them was not having the right level of inventory or the right pricing. And guys like Target, Sears and Wal-Mart just destroyed them. Once again, it’s the issue of walking the talk. It’s a full-and-broad-breast-type circumstance. It’s not just about one component up, I’ll have people help you. It’s about having people help you. It’s about having the products that are necessary. It’s about having the customer experience identified. And from the Toys R Us perspective, while support was important to a client, getting the product at the right price was important, too. And it’s ultimately hurt them a great deal.

Gwynne Young
Well, apparently, they didn’t even do what you’re talking about well in recent years, because one of the changes they’ve made, I read, is they’re bringing their products down lower so that kids can see them, and they didn’t do that before.

Evan Levy
Well, it’s a tough business. I mean, regionally, it’s just a tough business all the way around.

Gwynne Young
Cathy, how aware is your board, and how aware do you think boards of directors are, regarding these strategy issues? Are they always looking at profits and shareholders?

Cathy Burrows
Actually, from an RBC perspective, I can say candidly, while the profitability, obviously, is the bottom-line measure, there has been a long-standing requirement that we look at other measures, as well. And that starts at the top of the house and runs all the way through. The balanced scorecard approach that RBC takes is one that absolutely includes a very strong component measurement around client commitment, understanding what’s important to clients, both through research as well as through direct customer contact, and understanding why customers are likely to recommend the organization.

Do they perceive that the organization’s acting in their best interest, for example? And how satisfied are they with problem resolution? In addition to the customer commitment to the organization, both employee capability and commitment are also a strong component of that scorecard. And then, not surprisingly, risk management is important in financial services and then, ultimately, the sales and business performance in showing that there are customer-level managers of that sales and business performance that might look quite different than the traditional P&L that you would see for a product within an organization.

Metrics
Bob Thompson
Who set up that balanced scorecard?

Cathy Burrows
That balanced scorecard was actually driven ultimately by the vice chairman of the bank, but at the time, he was the head of Personal Financial Services. The perception was that, rather than driving sales and service performance on the basis of a P&L, for example, for a banking center, the banking center’s performance needed to be measured by this balanced scorecard approach. It has been in place almost 10 years, with evolution each year to refine it and improve it, to be able to align more effectively.

Bob Thompson
So, the vice chairman’s on your board. What was it that drove him or her to include customer metrics in how the CEO in their organization would be measured?

Cathy Burrows
There were a couple of factors. Some of them would be internal; some of them would be external. External factors included things like the fact that the organization was unable to use mergers and acquisitions as a means to grow. Therefore, organic growth was going to have to come from the customer base. And, when we looked at the customer satisfaction levels, the reality was customer satisfaction wasn’t sufficient to say: We’re in a good place to grow this business organically.

In looking at some research underlying that customer satisfaction, it was clearly demonstrated that financial services was delivering just baseline what customers expected, in terms of the new channels that were being introduced. But the reality was, what customers really expected from us was that we understood who they were; that we could anticipate their needs; that we valued their business. Understanding that there was a huge discrepancy between what the bank was focused on and what was important to customers directed the organization to say, “If we’re going to grow, we’re going to have to better use this customer information and this customer research and deliver what it is customers expect from us, in order to create that commitment.”

Employees were a critical part of that, because it was recognized fairly early that employees were the face of the brand and were the ones who, in most of the transactions that clients had with us, were the responsible parties. So they needed to be engaged in that process, as well.

Gwynne Young
Is that something that the board set up or the CEO had made a goal?

Cathy Burrows
That was absolutely established by the head of the largest business of the bank, which was the Personal Financial Services Division at the time. But of course, that then got communicated very clearly as, “This is the strategy.” The board monitored that strategy as it was implemented. It went all the way through the organization. I think that’s kind of a hallmark of how that organizational change has to occur, and I think David and Evan have both said it. It’s one thing to articulate a strategy and a clear position as to what it is we want to accomplish. It’s quite another thing to get it executed all the way through the organization in an effective way.

Evan Levy
It’s funny you mentioned that, because one of the biggest challenges with the—whether you want to call it top-line measures or the balanced scorecard—isn’t when the executive says, “We shall do this.” When Bob Eckert went over to Mattel from G.E., he was well-schooled in Six Sigma. If you take a look at Pete Kight, who is basically the guy that built CheckFree from next to nothing to what it is now today, he insisted on Six Sigma. But the real challenge wasn’t identifying what the top-line measures were, it was pushing it through the organization, so someone in finance, for example, understood why customer satisfaction even mattered to them or if it did at all. Or the people in logistics or customer service understood which of the metrics they, in fact, could influence. At the end of the day, what was it really worth? And how can I do my job to effect that? At least, with my experience with these two firms, that was their biggest challenge. It wasn’t the first top-line measures. It was filtering it through the organization to get people to understand, “Why do I care about CRM?”

Bob Thompson
But, Evan, if you didn’t have the senior management and the board interested enough to establish measures, then there would be nothing to push through, so we’re not suggesting that one is more important than the other. But part of the reason why we wanted to have this discussion with you folks is that it just seems like there is a disconnect, that either a) there isn’t really a driving force at the top of business or b) there is a vision, but there’s a disconnect. It’s not actually implemented in the organization, and so, this is why we want to explore what these linkages are. How do you actually take a good idea that people all nod their head about and make it work in a company? And, it is quite a bit more difficult than just a measurement or a slogan that everyone can agree to.

Evan Levy
I think one thing that Cathy mentions about her firm, though, is they have the ability to execute, whether it’s pushing top-line measures throughout the organization or the value of CRM, it’s a company that does understand execution. One of the issues with Mattel was before Eckert took the helm, they couldn’t execute. We’ve already mentioned some other firms that have the same type of challenges.

Bob Thompson
Back to this question about boards of directors, we have a little bit of a theory here that we want to explore today. If you agree that the CEO really needs to be a driving force—and maybe that’s a point of debate—then who’s the CEO’s boss? Well, it’s the board of directors. And certainly in publicly-held companies, the boards are more accountable than ever these days. So, what should the boards do to help make this process happen? Any thoughts on that, Evan or David?

Evan Levy
Well, I can take a first crack. The board of directors is a group of people that meet quarterly, and sometimes, more frequently than that, but they don’t have day-to-day responsibilities. I think there’s a CEO and executive staff responsibility to determine if CRM truly is important, to make sure it gets on the radar of the board of directors. The board of directors —pardon me for saying this needs to be out of the way if it’s truly important.

I mean, if you take a look at Disney, Sidney Poitier is a board member. His day-to-day involvement of understanding how Disney operates is clearly arm’s length. If you take a look at what’s occurred with just the lawsuits in Delaware, it’s clear that there’s an amount of limitation toward what a board of directors can accomplish. However, what they can do is say, “You know something? We’re not making our numbers. We’re not producing.” Now, there’s a CEO that says, “You know something? I’ve done the work with my team, and here’s what we want to execute and what we want to occur,” which is CRM. Now you’re at the point of “OK, CRM is a point of visibility.” Then great. But I struggle believing that a board of directors is close enough to understanding the operational aspects of the company to be able to say CRM is important.

Bob Thompson
But, couldn’t they be smart enough to at least ask the question, “Have you considered differentiating along the lines of the relationship, rather than doing mergers and acquisitions or trying to drive your cost down or whatever? Hey, why don’t we talk about that? Is that part of your game plan? I mean, that’s what Cathy told us earlier, right? That it was a competitive environment that really drove this initiative at RBC. Is that correct?

Cathy Burrows
I think that certainly created a catalyst at a particular point in time, so there was an inflection point. I would, however, say that there had been a longstanding commitment to the value of customer information, and the value of execution, in terms of sales and service. What became the bigger challenge was looking at a particular point in time when you couldn’t merge, and you also understood the rapid increase in the number of channels. So to David’s earlier point about the consistency of touch-points, there was a great deal of inconsistency across your touch-points, and customers were very aware of it.

Evan Levy
Cathy, it seems that one thing that you’re identifying, though, is this whole initiative didn’t necessarily come from a board of directors. It came from someone who may have been a director but certainly an employee of the bank who understood the business, who said, “You know, this is something that’s critically important, let’s move forward with it.” And maybe it got the visibility of the board of directors, but it wasn’t an idea generated from the board of directors, itself.

Cathy Burrows
No, I would have to agree with that, certainly in RBC’s case. I guess where it becomes the challenge now is that it was easily almost 10 years ago. So it starts to become the point that David was making earlier: Do you have time to wait?

Evan Levy
Sure.

Cathy Burrows
If it isn’t coming out of the business, the catalyst has to come from somewhere.

Gwynne Young
But, is this a different conversation, then? Are you meaning, Evan, that it’s really up to the CEO to explain to the board of directors that having a customer-centric business will improve profits and appease the shareholders?

Evan Levy
That’s my belief. The board of directors approves and ensures that there’s some level of balance to what’s going on in a company. They don’t direct the company.

Bob Thompson
I agree, and I didn’t mean to imply that. Argue with me here a little bit, guys. Do you believe that boards of directors are educated enough to, at least, ask the right questions, or be able to assess whether the CEO’s doing his or her job relative to putting customer strategy in the proper place or not in a company? David, what’s your opinion on that?

David Rance
There are two boards of directors. There’s the operational board of directors, who should be, and there’s the executive directors, who probably won’t be. I honestly think boards are driven too much by shareholders to their public companies, and I think the investment community is equally guilty of not asking the same questions of organizations when they value them. I think that’s really the change that we need to see. We need to see if these big-name companies fall over before people start to change the questions they’re asking. Now, I think a CEO might instinctively think, “That’s what I’ve got to do to deliver operational effectiveness. He may not find his board members—the external ones, in particular—asking those questions of him.

Bob Thompson
A quick aside, I asked Tad Piper at Piper Jaffray about a month ago about this issue of how the analysts look at customer-centricity. Customer-type metrics, do they factor that into how they analyze and rate companies or the stocks of companies? And he gave a somewhat vague answer, but my conclusion was: No, they really don’t do that, and until the analysts really hold the CEOs accountable—and their boards of directors—and it affects stock price, I wonder if any real change will happen at that level.

David Rance
That was my point, Bob. Unless someone kind of really suffers badly, or more importantly, someone takes a real market differentiation position, you won’t see change. I know you’re familiar with Tesco in the U.K. Tesco made a big leap in our model [based on a baseball diamond] from first base to second, and they’ve invested a lot in not just the brand but the customer experience and CRM and loads of things to create a very, very different proposition. And they’ve achieved it. It’s probably one of the only companies that has. One of the companies that’s suffered as a result of that process has been Martin Spencer in Sainsbury; higher value brands slipped backward because the customer loyalty switched. And, that was a conscious choice made by the executive team, but it wasn’t driven by the market, by the market analysts. It was driven by the operational team within the business saying, “Here’s our current market position and our profitability and our proposition. We need to move to this point. How do we do it?”

And, I think at the end of the day, the whole thing comes down to leadership. I think the key question is: Where does that leadership come from? I think in our business, that’s the hardest question, because it comes from different places all the time. It isn’t from one particular point. It ought to come from the CEO but doesn’t always. It can come from customer service. It can come from marketing. It can come from someone external. It can come from a market partner. But it’s where the impetus is initiated and how it’s picked up and driven across that makes it happen. I can’t see it coming from the investment community for some time.

Ownership
Cathy Burrows
But, to your point, David, it can be initiated by the head of customer service, or perhaps it’s the head of marketing who’s creating some of those insights. But until it’s actually embraced by the head of the business, it becomes much harder to actually—

David Rance
Oh, tell me about it. Remember, I was running customer service in a mobile network in the U.K. and I created what was a culture within a culture. I even changed my job title to Wowing Customers Director. And, so I was a fruitcake, and the business was completely somewhere else.

Bob Thompson
And, you still are, David.

David Rance
Well, I mean—

Bob Thompson
That’s why we love you.

Evan Levy
That’s actually a very apropos remark, if you take a look at two companies that just merged here in the states, AT&T Wireless and Cingular, where AT&T Wireless was under tremendous scrutiny and criticism. It was support and not taking the customer’s experience or details into account. You compare that to Cingular, which for a number of years was the red-headed step-child in the way they were handling customers. If you go back about two years when they expanded their geography, they totally modified the way they did packaging and pricing to be very, very customer-centric. And they’ve come up with a number of services and things. In fact, they’ve gained much more visibility and a great deal of success, to the point where, if I portray my product and services in my company to what the client needs, it’ll help, particularly if I’m in a consumer-based product environment.

Now, contrast that with the financial services space, where you’ve got Schwab that was trying to go up market, from being a pure discount brokerage and a financial supermarket, to basically becoming like a Merrill-Lynch. It’s not been successful. In fact, their challenge has been, based upon what you can read in the papers, that many of their customers aren’t necessarily interested in viewing them in that manner. So, they’re actually changing who their customers are. It’s been a painful experience.

Gwynne Young
Well, sure, because as a customer, I can say they started assessing fees I didn’t think that I should have paid. That’s not customer-centric to me.

Evan Levy
Exactly right.

Cathy Burrows
But, what’s interesting is you don’t see a lot of companies kind of proactively going out to the analysts and saying, “Here’s how we’re managing this portfolio of customers, and here are the financial implications of that,” the way they would, for example, in financial services, talking about a loan portfolio, or a deposit portfolio.

Evan Levy
Sure.

Bob Thompson
Does RBC?

Cathy Burrows
: They absolutely have the capability of doing it. What becomes the question is: What’s going to appeal to the analysts? And, I think it takes a little bit of a challenge to kind of put something in front of the analysts that’s different from what they’ve actually seen before.

Evan Levy
Until companies measure their success not solely on revenue and widgets sold—

I think RBC is measured on number of customers or number of accounts; Schwab, number of accounts; First Union, Wachovia, number of accounts. It’s never about the number of people doing business there, and that’s something that’s going to take a long time to shake because that’s not the way people look at it.

Gwynne Young
Evan, which way do you think the new Cingular and AT&T Wireless is going to go?

Evan Levy
I’m not sure I understand your question.

Gwynne Young
Well, you were saying that AT&T Wireless on its own wasn’t so customer-centric, wasn’t looking at the customer, and Cingular was. Now that they’re merged, which—

Evan Levy
Well, by and large, Cingular’s absorbing AT&T Wireless. They basically bought a client base. There are certain infrastructure components that AT&T Wireless was very, very good at, but when it comes to customer branding, packaging and customer facing, they’re going to use a Cingular brand. That’s becoming apparent, just on the media stuff. I was actually curious on your remark, Cathy, in the way that there seems to be this counterbalance of how do we measure our business internally vs. how do others measure us externally? That seems to be a bit of a conflict that you were touching on.

Cathy Burrows
I absolutely think it is, and I’m not sure, in fact, how it ultimately gets resolved, but I do believe that the analysts are not asking some of the more relevant questions around which customers are adding value and which customers are destroying value for your organization. And, until some of those tough questions start to get asked—

Very few companies that I’ve seen can actually answer those questions meaningfully, not just based on a current quarter or current year measurement but also on a projected longer term.

Evan Levy
It’s funny we talked about wireless. That’s one of the few industries in which they actually measure things by subscribers. It’s not the number of accounts the subscriber has but the number of subscribers, so it’s actually talking about the quantity of people.

David Rance
It’s all net out as well.

Bob Thompson
In the time we’ve got, I’d like to get down a little bit more where the rubber meets the road. We’ll make a leap of faith here and assume that the right questions have been asked, the strategy has been set and for whatever reason, wherever it started, there is a direction to be more customer-centric. Now, really, the challenge is how to “operationalize it.” I wonder if you could each talk a little bit about how you take the strategy of being customer-centric—or call it CRM or call it flavor of the month—into the organization and really make it the way that business is done day after day after day.

Cathy, would you mind leading us off on that?

Cathy Burrows
Sure. I think we’ve talked a little bit about it. It’s fundamentally: How are you going to measure your success in having achieved this? So what targets are you setting? They don’t all have to be financial, of course. They have other relevant kind of customer level measures that are part of that. Having established those success measures, can you actually articulate that right down into particular individuals and what will be meaningful in their particular roles in the organization and how they get rewarded for having supported those goals? One of the hallmarks of most of the RBC implementation has been taking a scorecard and then taking that down into an individual level and being able to support specific goals within an individual’s performance management document. It’s being able to align to that scorecard and be consistent about supporting that all the way through, because first out the gate, you’re not going to be successful.

Additionally, I think there need to be some organizational changes around basic implementation. Basic business processes that exist today, whether they’re part of the customer interaction or the way you market to a customer, need to be looked at to assess the impact on a customer, How should it change now, if what we’re doing is based on a customer-based strategy? My experience with that says we’re no longer, for example, doing direct mails that push a product. What we’re doing is trying to understand something that’s relevant or important, from a customer perspective. So, is it a question of being better able to improve the information that you have about a customer’s profile, in order to better anticipate their needs and better deliver against their needs? Or, is it certain moments or interactions that you might have with a customer that don’t actually meet their expectations? And can you start to revise that?

Bob Thompson
OK. But be a little bit more precise, if you could, Cathy. What does it mean to be aligned? Are you talking about setting certain types of perspectives or measuring them certain ways?

Cathy Burrows
I have an understanding of what the organization’s goals are to support this customer strategy. do I have specific or individual goals that are consistent with those so that what I do on a day-to-day basis—the sum of the parts—becomes that whole?

Employee alignment
Bob Thompson
I wanted to pick on you just a little bit, so pardon me. but I think that alignment is kind of consulting speak in the industry. like strategy and a lot of other things, I think it sounds good, but we’re trying, for our community, to get things a little more specific. Do you have an example in your company of a specific metric that somebody on the front line is held accountable to, through management. Is it included in their assessment for promotions or rewards to help the employee stay aligned with the direction of the company?

Cathy Burrows
Sure. For example, one of the measures is what’s the percentage of clients who have a an everyday banking package? If you’ve got somebody’s everyday banking package, that means that you’re likely their primary financial services provider. That gives you the right of first refusal, ideally, on a number of different products and services. Also, it’s a tangible demonstration of a service strategy that the bank implemented. We know that customers who have everyday banking service packages are more satisfied and stay with the organization longer and have, on average, more products and services with us. As a result, we want to have more customers with everyday banking service packages. So putting that on somebody’s individual scorecard and being able to set goals around that gives somebody a very tangible objective that links directly to the ultimate customer-centric strategy of the organization.

Bob Thompson
David, would you like to go next? How do you operationalize this thing on a day-to-day—or just more of a working—basis with the people of the organization so that they do what the strategy says they should be doing.

David Rance
That’s an easy question, difficult to answer. To make sure that you know in your organization how that strategy is operationalized right through the business, so you can see how aligned it is and consistent, we always look in five different areas. We look at the leadership set of messages, which is the brand, and the goals and the planning process and the vision—are they aligned with the objectives? The next is the whole customer strategy, which is not just the marketing piece, the segmentation and analysis and that, but how that’s operationalized through the customer processes. Are they aligned and consistent?

Bob Thompson
Can you give us an example of one of your clients, perhaps?

David Rance
If you have done propensity analysis and you see there’s no change in sale, which parts of the business can sell? And if you are a student in marketing, any customer point of engagement is an opportunity to sell. You want to make sure that the customer service process—and all of the frontline processes, even collection—understand what the opportunity is for that customer so that during the conversation with the customer (where, probably, they contacted you, so they’re already listening), you’ve got an opportunity to shape and influence that customer towards the strategy that’s being defined by the marketing team. In other words, it is consistent, but it needs to work the other way around, too.

If the customer gives you feedback that is inconsistent with the strategy, you’ve got the opportunity to feed that back into the business and drive change. That’s at the process level or customer information level or in the strategy level. It’s all joined up, and that’s the whole customer strategy. That’s it. It’s not a marketing strategy and a sales strategy. It’s the customer strategy executed across the business, and it’s consistent. Then, there’s the one you mentioned, which is the organization. It isn’t just the structure, but it’s also the culture and reward, recognition.

Bob Thompson
I want to dig into that a little bit, this recognition and reward system for employees. A specific example would be really helpful here, because I think, in general, we’re all in agreement that’s important.

David Rance
That’s a good case in point that you mentioned in the mobile market, where the companies measure on growth ads and acquisitions. If that’s how you’re paid, then that’s pretty much how you’re going to spend the focus of your time with the customer. And so, the reward and recognition must be aligned with what you’re trying to do with the customer. If your customer strategy is based around building the customer relationship on the assumption that over time, they will buy more from you because you’re inducing loyalty but your reward recognition is based on pure productivity or volume sales, that’s going to work against the customer strategy.

Bob Thompson
Evan, what are your thoughts on this operationalized issue?

Evan Levy
Well, I’m a big advocate of the [W. Edwards] Deming and Philip Crosby world of quality, which says if you want people to embrace the value of quality, you make it a part of their everyday measurement metrics. As Cathy mentioned about the management document for people at RBC, you know something? If you want to operationalize something, you make it part of their job, and you make it how they’re measured. If I go to Lexus and Toyota, the Toyota call service reps are measured on duration of call. So they have very, very short call durations. If you go to Lexus, they’re actually measured on customer survey and satisfaction on the call, itself, so they have calls that typically average in excess of 20 minutes. And lo and behold, what happens is they get high level of survey results. They get high level of positive survey experiences. And people’s compensation and bonuses occur due to that.

The same thing happens if you go to Mandalay Resorts—the way they actually hand tips and so forth. It’s not on a per-dealer basis, it’s on the entire group. So we either succeed as a team, or we fail as a team. So, if you want to operationalize CRM in an organization, you make sure that every individual understands: Here’s how I’m going to be measured. Here’s how CRM relates to that. And I either make more money, or I’m penalized based upon that. I hate to sound so mercenary or superficial in the way that it should be approached, but if you focus people on short phone calls, then they won’t really care about the quality or the content of the phone call. If you focus them on duration of phone call and survey results and that there’ll be bonuses based on success of the phone call, itself, suddenly, they’ll change the way that they do things.

Bob Thompson
If I could bounce this over to Cathy, you mentioned a little bit earlier something about culture at RBC. In your opinion, at your organization, how much of the motivation that employees feel to do their job—the customer-centric part of their job, at least—comes from an environment where “that’s just the way we do things here” vs. how they’re directly paid or rewarded? I do something. I’m measured. I get a good measurement. And I get something that’s valuable to me. How much of it is culture vs. metrics?

Cathy Burrows
Wow. I think that’s another one of those you asked that’s really tough to answer. I guess I would have to say that you only get the rewards on a quarterly or an annual basis. The reality is that your emotional commitment to that has to be day-in and day-out. Certainly, the RBC performance program is one where it’s not just about the metrics and the rewards that come associated with those metrics, it’s about day-in day-out, getting recognized for your performance and getting acknowledged for your performance in terms of delighting customers. It’s a peer nomination process. To me, that’s the day-in, day-out stuff. So to me, that’s a part of the culture. I would say that that creates much more of a commitment to the behaviors than the ultimate rewards. The rewards are the reinforcement, but the true enablers are the day-in, day-out.

David Rance
See, I think it’s a couple of other things. I’ve just spent a few days in a Heidelberg hotel. I was there a few weeks back and had a really bad customer experience. I loved the people, but the processes were really awful. So I gave them some feedback. When I arrived this time, they were all over me and anxious to prove that they’d taken my feedback and applied it. And, they didn’t only tell me they did it, they demonstrated they did it. They said, “Can you give us some more? We want to learn. We want to improve.”

And so my emotional engagement as a customer—and the same for employees—is if I can really help shape this company and make it a really, really better place, I’m going to be much more emotionally engaged. So, it comes down to behavioral things. The metrics are now quite common, and I was looking at the metrics of, again, a company that is renowned for its metrics. And I said, “Where do you see metrics on your pages of metrics?” They’re on the back page. They said, “But, we measure them.” And, I said, “Where are they?” They’re at the back. So, when do they get reviewed? The end. So, what message does that convey to the business?

There are channels there, but it was the behavior. You try to change an organization, and people look for the little things. They look for the behavioral aspects that say, “Are you really serious? Because if I’m going to stick my neck out and do what I think is best for the customers, I want to make sure I’m not going to get shot in the process. I want to make sure you’re serious.” So, it isn’t just the measures. It’s how and when they’re applied, and are people serious about them?

Evan Levy
Let me jump in real quick because you brought up something very, very interesting. The whole premise here is: By having a more customer-centric view, your job can ultimately be more successful and less effort. And you kind of suggest, well, they’re doing it because they know it’s important. But they don’t, necessarily, yet understand the benefits of why it’s more important or the benefits of doing it, because at the end of the day, it’s so I can get more done; I can be more successful, and my customers are happier.

David Rance
Yeah, it is a win-win. I find it extraordinary because most CRM programs are justified on the incremental revenue, rather than the savings in op ex, and they’re actually bigger. If you drive out the errors in a business—the self-inflicted cost of functional processes and functional organizations and inconsistencies—it’s a huge proportion of cost to serve, and that’s the justification of CRM. It’s not only about the revenue, it’s in addition to that. And of course, it’s not just happy customers at that point, it’s happy people, too.

Gwynne Young
That sounds like a real nice way to end this as we’re almost at the end of our hour. I’d like to give you all a little time for a final thought on how you get started. What kind of advice do you have for companies that are really at the very beginning? David, why don’t we start with you?

David Rance
Well, you call Round and have a customer’s assessment and tell you what your weak spots are. I think the key is: Don’t try to boil the ocean. To me, the most important person on a CRM program is the finance director, because I think the business case drives the organization and regiments it. It is such a compelling argument. For those of us who are in the marketplace, it’s like: Why wouldn’t you do this? I think the reason is: People try and overcomplicate it. I think it’s about understanding the little things you need to do across the business that create alignment and consistency just by changing the metrics.

Gwynne Young
How about you, Evan?

Evan Levy
My remark is: one step at a time. Start with someone that believes that the customer relationship matters. That may seem very, very flip and simple, but there’s a lot of organizations within most companies. If you’re going to go down this path, try and start with the folks that care about measuring the customer, and then go from there. It’s always difficult to convince someone to change until you can show them, as I think Bob put it, where the rubber meets the road.

Gwynne Young
Cathy, what would you say? Not that you want to have competition, necessarily, but what would you say to other businesses?

Cathy Burrows
I’m going to quote one of my colleagues at Baseline Consulting: Do you really understand that where there is a pain point you could absolutely improve the overall organizational performance—on many levels, whether it’s from an employee perspective or a client perspective or ultimately business performance perspective? Is there something that you can focus on that you can make a difference with by using some of these strategies?

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