What is the “X Factor” in Customer-Centric Success?

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Leading by example.

Not collecting feedback. Not finding the right loyalty metric. Not paying people to increase NPS scores. Not journey mapping. Not predictive analytics. Not multi-channel contact centers. Not employee “happiness.”

Of course all of these things can contribute to customer-centric success. But they are not the “root cause,” despite the fact that most customer-centric success stories include these practices.

Based on 15+ years of research, I distilled down these practices and many more into five organizational habits that collectively work together. These habits are covered in detail in my book Hooked On Customers:

  • Listen to what customers value, get feedback on their experiences
  • Think objectively to make sound, fact-based decisions
  • Empower employees with authority and resources to serve customers
  • Create new value for customers with new or improved solutions
  • Delight customers by exceeding their expectations

My recent benchmark study confirmed, once again, that each of these habits is correlated with business success. However, in crunching the numbers, I found something quite interesting about why these habits are more prevalent in top-performing customers.

Why Leaders Matter

Let’s step back for a moment and discuss what leadership really means, without any customer-centric slant. This has been studied intensely for decades, as researchers have tried to decode what makes up a good leader.

In “Follower-Focused Leadership: Effect of Follower Self-Concepts and Self-Determination on Organizational Citizenship Behavior” (by Michelle Vondey, Regent University, 2008), you’ll find this definition:

Transformational leadership focuses more on empowering followers to work for the best interests of the organization and to meet organizational goals. Transformational leadership has several characteristics:

  1. Leaders communicate a clear vision.
  2. Leaders explain how vision can be achieved.
  3. Leaders show confidence in both vision and followers.
  4. Leaders lead by example.
  5. Leaders empower followers to work toward vision achievement.

We expect leaders to develop a strategy, “sell” their vision, and build confidence with followers. That covers items 1, 2 and 3.

If surveys by IBM, Forrester, Gartner and others are to be believed, 80-90% of business leaders say they committed to being customer focused/obsessed/centric — pick your term, it doesn’t matter. Why then, despite all the rhetoric in recent years about improving the customer experience, did overall customer satisfaction ratings actually decline in 2014?

To be sure, there are some bright spots. Industries showing significant improvement include cell phones (thanks to Samsung, not Apple), drug stores, search engines, social media, and specialty retail. But a lot of other industries are trending in the wrong direction.

It’s one thing to define a strategy and communicate it. Quite another to actually get it done, which I see is the main thrust behind item 5 – empowering followers. That requires implementing the right “systems” to enable, encourage, and reward followers for doing the right things. In other words, creating and practicing the right habits.

Leaders Setting a Good Example

That leaves number 4 — Lead by example — which my recent research suggests is the key ingredient for customer-centric change. I call it the “X Factor.”

I analyzed two dozen different practices to see which differentiated top-performing businesses (“Leaders”) vs. all others (“Laggards”). One really jumped out at me: “Leaders setting a good example.” As you can see in this chart, there is a stunning gap of 20 percentage point or more for all five habits.

Source: CustomerThink
Source: CustomerThink

That prompted some additional digging to learn what exactly does it mean to “set a good example.” I interviewed some of the survey takers, and asked for input from industry experts. Here are a few examples I’d like to highlight:

A great example of this is Steve Meyer, CEO of Welch Allyn. You might remember him as one of the keynote speakers at our CX Summit last May in Scottsdale. Steve was the driving force behind Welch Allyn’s re-energized CX initiative. He allocated additional resources, assigned key leadership, actively participates in action planning, demands involvement from other company leaders, and insists that customer insights are factored into decisions across the organization.
Patrick Gibbons

My favorite story comes from SunTrust. “People started asking in meetings: Do we believe X because we’ve been bankers for Y years, or because clients told us?” VanDeVelde continues: “As our chief marketing officer and our head of cross-channel strategy began doing that all the time, it became common practice throughout our company. Then you begin to seek it and call people on it when they don’t. So we have a culture where we’re trying to put the customer in the center of our decisions.”
Lynn Hunsaker

Southwest Airlines focuses on a fun flying experience. On Halloween, the CEO Gary Kelly came as Kiss. Goggle his name, go to images and check him out. Tony Hsieh at Zappo’s focuses on being customer-centric and, at busy times, he works in the call center on the phone.
Chip Bell

My favourite example of a business leader leading by example in the UK is a chap called Jens Hofma. Jens is the UK CEO of Pizza Hut. Jens decided when he took over the role that the best way for him to develop the authority to lead his business was to understand it from the eyes of both his employees and his customers. Jens therefore decided that one day every week he would work as a member of the waiting staff in his restaurant in Oxford Street. Jens has made a number of changes to both working conditions and practices and the customer experience as a result of what he has learned and observed.
Ian Golding

There is a small business owner who, like Stew Leonard and a few others, has become an inspiration to any executive in any company. He is Chris Zane owner of Zane’s Cycles in Connecticut, whom I’m fortunate to call a colleague. For some insights on how Chris sets examples for his employees, and the long-term value he provides for customers, I’d encourage everyone to read his book: http://reinventingthewheelbook.com/.
Michael Lowenstein

I had the privilege of working with a leader who daily did small things that lead by example. One example was each day he arrived early and emptied the dishwasher in the kitchen closest to his office. In addition to leading by example, he also created an environment where people had the opportunity to interact with him outside his traditional work space/meeting.
Bill Hogg

My favorite example is something I’ve written about a number of times and included in my books. I just copied this from one of my articles. “I have a favorite story to illustrate this point. Walt Disney used to walk through Disneyland to observe how.. If he happened to see a piece of paper on the ground, he would stoop down to pick it up. He called this Stooping to Excellence. He knew that as he walked through the park, all of the employees were watching him. He had to demonstrate excellence. He had to demonstrate that he wasn’t beyond picking up trash off of the ground.”
Shep Hyken

One such leader is HS Bawa, who just retired as Managing Director of Zuari Industries. I was their consultant and always noticed how well Mr Bawa responded to employees, and added value to them. He was close to customers in the field and visited them and with suppliers. They all loved him.
Gautam Mahajan

CEOs, if you are serious about customer-centric success, you have to show it through your personal behavior. Spend time with customers, and in customer-facing jobs. Listen to customer needs. Require your people to use customer input in decision-making. Empower your people to take ownership and risks, and don’t punish them for failure.

By “walking the talk” you will send a message to the rest of the organization about how you want them to behave. That will ripple through the management layers and over time you will have the customer-centric business you say you want.

As the Italian proverb goes, “Between saying and doing, many a pair of shoes is worn out.” Happy trails.

Further reading:

2 COMMENTS

  1. No doubt that the culture of a company starts with leadership define the culture. It is then leadership’s job to get all employees into alignment with the vision. They also set the tone and demonstrate by example, how to deliver the vision. Great article! Thank you for sharing.

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