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Uncommon Practice

Shaun Smith | Mar 4, 2008 486 views 6 Comments

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Why are Virgin, The Banyan Tree, Harley-Davidson, Amazon.com, First Direct, Pret A Manger and Tesco all ‘uncommon’? The answer is that their founders and many of their senior directors share an approach to business that is unusual in industry today. We admire these organisations because they have strong brands, enthusiastic customers, proud employees and their own unique way of doing things.

Andy Milligan and I set out to find out what makes these brands unique and their companies ‘tick’. The result is a book, called ‘Uncommon Practice – People who deliver a great brand experience’ which tells the story of nineteen unique brands in the words of their executives. We found that their approach to business is not the norm, that these companies often do things that are unusual and even defy conventional business wisdom, ‘daring to be daft’ to paraphrase Richard Branson. But what gives them the confidence to operate in this way and what is it that their leaders do that is different?

Uncommon Practice not Best Practice

We were speaking at a large Customer Service Management conference. Senior executives from Disney, Southwest Airlines and Ritz-Carlton gave presentations and the audience were clearly enthralled with how these organisations operate. Perhaps it is no coincidence that these three organisations are often the first port of call for organisations wishing to benchmark in the US. Indeed they each offer public workshops to teach their best practices. Yet this is dangerous. One of the first principles of business strategy is to differentiate rather than be ‘me too’. To attempt to copy these organisations runs the risk of being second rate, at best and totally inappropriate at worst.

For example, Julian Richer of Richer Sounds takes a very uncommon approach to creating a distinctive employment experience for his best performing “colleagues” by providing Bentleys for the weekend and trips on the company jet. Richer Sounds has the highest sales per square foot of any retailer in the world. Why? Because Richer believes that the customer and the employee experience are inextricably linked and so he uses uncommon ways to create a great employee experience and reward them for creating an exceptional customer experience.

The issue is not what these companies do but why they do it? Best Practice assumes that what works for one company will work for another. In our view, it is far more important for organisations to first decide their strategy or value proposition and then decide how they can bring it to life through creating an aligned culture. Only then can internal processes and policies be designed to reinforce this. Having done all of this there may be a case for benchmarking against best practice processes — but not before.

For example, Sir Terry Leahy, CEO of Tesco the global supermarket chain, told us that the key to Tesco’s success was “The day we stopped following Sainsbury and started following our customers”. In other words they focused on differentiation and meeting the needs of their target customers rather than simply copying competitors. Since then the brand has focused on creating value for customers to earn their life-time loyalty. Tesco’s slogan of ‘every little helps’ describes the enormous attention to detail that enables them to ensure that processes, people and products operate seamlessly to deliver value.

Many of the leaders of the companies in our book do not have formal MBA training. Attitude and passion are the key factors that characterise these unique brands and they dare to hire for ‘fit’ more than ‘wit’; For example Pret A Manger recruits new hires (including directors) by paying them to work in a shop for a ‘Pret Experience’ day. At the end of the day the front-line people are asked to vote to decide if the person should be taken on. Only five per cent of candidates are ultimately hired. Most who fail do so because they do not demonstrate the passion for food, passion for people and passion for Prêt that is a cornerstone of the culture. What Pret realises is that the culture and the way that people treat each other is the DNA of the brand. When human resource processes support the customer experience and brand in this way you can be sure that the magic will be sustained.

There is probably not a large organisation today that does not talk about ‘satisfying customers’ as a core value. Yet the sad fact remains that the experience most customers receive is mediocre and largely undifferentiated. Think of retail banking. Until First Direct entered the UK market the sector was defined more by its sameness than its service. To talk about ‘service’ is to focus on the company to talk about the ‘experience’ is to focus on the customer. The difference between the way most executives talk about customers and how the Uncommon Practice leaders do is very different. It is not one of the things that they pay attention to it is the main thing they pay attention to. They understand that in order to exceed expectations the brand, the customer experience and the strategy must be aligned. For example, the words ‘First Direct’, describe the brand, their strategy for differentiating and their unique way of dealing with customers.

When an organisation brings these three elements into alignment it is able to deliver what is called a ‘Branded Customer Experience’. In other words a customer experience that is so unique, so satisfying and so valuable to target customers that the experience defines the brand. The Banyan Tree is a luxury chain of hotels and resorts that has been voted Asia’s best resort experience and one of the world’s best places to stay by Conde´ Nast Traveller magazine. The brand is targeted at couples and it promises ‘Sanctuary for the Senses’. Nowhere is this promise more vividly demonstrated than by the ‘Intimate Moments’ service which is available to guests if they wish. The aim was to transform the customary bed turn-down into something unique and on-brand. While you are away at dinner staff decorate your villa with 50 candles, make up the sleeping platform with silk sheets sprinkled with orchid petals. Special burners fill the room with the smell of Banyan Tree’s own brand of aromatic essence and the villa resounds to the soothing sounds of a special Banyan Tree CD. The outdoor bath is filled with warm water and relaxing oils added to it; once again the resort’s own brand made from traditional Thai ingredients. Finally, if you wish, the Banyan Tree’s in-house trained therapists will be on hand to provide a massage to you and your partner. The brand has taken the mundane turn-down service that every luxury hotel offers and turned it into something which is a ‘Branded Customer Experience’.

An experience of this kind requires careful attention to customer service, operational processes and products so that together, they create something special for customers. Some strategists say that in order to win in the market you have to differentiate in one of these three and that it is very difficult to be good at them all. Yet we found that many of the Uncommon Practice companies excelled at customer intimacy, operational excellence and product leadership. A case in point is Amazon.com. This company has grown into a world-wide brand in a very short space of time. What is its dominant strategy? In fact Amazon’s major strategy is product leadership through offering the widest range of books in the market. Yet it is able to do so at a low price point and deliver excellent service through its people and processes.

In 2004, Harley Davidson, the motorcycle manufacturer, celebrated its centenary. It is hard to believe that this company had a near-death experience in the early 80’s and was close to losing its market to the Japanese manufacturers. The turnaround can be traced back to 1981, when a group of 13 senior Harley executives led by Vaughn Beals bought the company. The leaders started the turn around by identifying customer needs through a process they call ‘Super-engagement’ This involves the managers riding on a regular basis with customers and hearing their feedback directly and turning this feedback into improvements for customers. This focus on zealously acquiring and using customer knowledge has resulted in 25 years of growth for the company.

So, differentiating your business rather than copying others, hiring for attitude rather than qualifications and being passionate about customers; common sense -possibly- but for most organisations it is still uncommon practice. Yet herein lays the opportunity. It is the challenge of leadership. It took a management buy-out to turn Harley Davidson into the iconic brand it is today, First Direct took a different route to its parent Midland Bank and Virgin makes a virtue out of being different.

Virgin is one of the few brands that have successfully ‘stretched’ from one industry to another. The reason it has been able to do this is that Richard Branson has developed very clear values for the brand and is passionate about being customer focused. The result is that customers trust the Virgin brand to give them good value and good service. We found that the leaders of the Uncommon Practice companies are profoundly customer-centric. Richard Branson told us; “Virgin loves to take industries and shake them up and make sure they’re never the same again. We’ve done it to the airline industry, we’ve done it to the financial services industry; we will do it to the rail industry”. Who will do it in your industry?

Shaun Smith

©Shaun Smith+ Co 2005

‘Uncommon Practice- people who deliver a great brand experience’
Published by FT Prentice Hall June 2002. ISBN 0-273-65936-7

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6 Responses to Uncommon Practice

  1. John Todor March 7, 2008 at 8:46 am (199 comments) #

    Shaun,

    Your use of the word “uncommon” says a lot.

    When I have analyzed companies like the ones you describe, I come away with the impression that a very visionary person made it happen. Not only did they believe it their vision, they found a way to make it the very fabric of their company.

    In contrast, when we look at the companies that adopt the jargon and hot concepts, I am struck by how narrow the application of the concept and how shallow the commitment, not in rhetoric but in action.

    Uncommon in that most people find the concept foreign. Now the question is how do we, and I mean consultants, help the common folks see the light. Shining the light on the uncommon is a start but it is insufficient to create real change.

    One place to look for insight is to look at people who transformed companies. Like Tesco. They dealt with two challenges. One, communicating the new vision and two, getting people to stop hanging on to the old way of doing business.

    John

    John I. Todor, Ph.D.
    Author of Addicted Customers: How to Get Them Hooked on Your Company.

  2. Shaun Smith March 8, 2008 at 4:44 am (42 comments) #

    Hi John,

    Thanks for your comment.

    I agree with you. I despaired of managers and companies blindly following ‘best practice’ or benchmarking the usual suspects and ending up with no discernable strategy.

    It was the findings from my book Uncommon Practice that motivated me to write ‘Managing The customer Experience-turning customers into advocates’ in which I attempted to provide a framework that would enable companies to find their own way. It did indeed look at large companies like Tesco to establish a systematic way for organisations to differentiate.

    All the best,

    Shaun Smith

  3. Graham Hill March 21, 2008 at 10:16 am (992 comments) #

    Shaun

    Thanks for joining the conversation on CustomerThink.

    I greatly enjoyed your Uncommon Practive book when it first came out some years ago. It reminds me a lot of Tom Peters’ “In Search of Excellence” book some years prior. However, some of the companies lionised by Peters are no longer around. They have been bought, broken-up or gone bankrupt. In spite of being excellent. I wonder how many of the companies in Uncommon Practice will stay the course over the next decade. And of those who survive, how much of their success will really be due to their customer experiences, and how much to other factors within or outside management’s control.

    Any thoughts?

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  4. Shaun Smith March 23, 2008 at 2:03 pm (42 comments) #

    Graham,

    Thank you for your comment. Uncommon Practice was written in 2002 and if you look at the companies we wrote about you will find that most of them have thrived. e.g Tesco, Amazon, Virgin, Banyan Tree, Harrah’s etc. So I would argue that the situation is very different to that of ‘In Search of Excellence’.

    In fact, so confident were we of our findings that I approached a fund manager in 2001 to launch the ‘Uncommon Prcatice’ fund which would buy a portfolio of shares in these companies. For various legislative reasons it didn’t happen but had it done so I would be a rich man today. Take a look at these companies stock performance against the index over the past six years and tell me we were wrong!

    Regards,

    Shaun Smith

  5. Graham Hill March 23, 2008 at 4:52 pm (992 comments) #

    Hi Shaun

    I recognise your enthusiasm for the customer experience from Uncommon Practice and your other books.

    Let’s not forget that In Search of Excellence was published in 1982, over 25 years ago. And it was based upon a similar set of best practices in business as Uncommon Practice is. The trouble with In Search of Excellence is that it suffered from the Halo Effect. As do most books on business in general and books on customer experience management in particular.

    The bigger questions for me are whether a superior customer experience provides companies with a financial advantage in the short-term and a sustainable competitive advantage in the longer-term.

    Putting the halo effect to one side, thus far, I have seen no robust treatment of the subject that even looks at these questions seriously, let alone answers them.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  6. Shaun Smith March 24, 2008 at 5:31 am (42 comments) #

    Graham,

    I think you will agree that in order for an organisation to compete effectively it must have a strategy for doing so. As you know, it is generally accepted that there are three main competitive strategies: Product Leadership e.g Sony; Operational Efficiency (Price Leadership)e.g WalMart; or Customer Intimacy e.g Ritz Carlton. Clearly if an organisation is choosing to compete on product or price leadership then enhancing the customer experience may not produce a return and may, in fact,dilute its positioning. If however, the brand is setting its stall out around the customer the nature of the experience it provides will determine the extent to which it is differentiated and able to attract and retain profitable customers. There are numerous studies that show differentiating from competing organisations leads to superior returns.

    So, I stand by my argument; that if a company seeks to compete on the basis of customer experience, then managing that experience becomes a key success factor.

    Regards,

    Shaun Smith

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