A great Scottish philosopher (I am referring to Billy Connolly and not Adam Smith here) once noted that St Peter probably didn’t say “Gosh! Did you have to barbeque my donkey?” on the road to Damascus. Like Billy, I probably let an expletive slip when I had my own damascene moment. For a whole career, as a successful finance professional, everything that I held true was that efficiency was a key differentiator and my Presbyterian ethic told me that efficiency was a virtue.
I even believed my own stories. “We need to mend the roof while the sun shines”, “We are freeing up cash so that we can do the sexy stuff we really want to do”, “You can’t manage what you can’t measure” and so on. I bored myself.
To me, back then, the key to a successful business was efficiency. And the key to efficiency was tight KPI management. But it slowly dawned on me that tight KPI management was just lazy leadership. It was driving forwards really fast while looking in the rear view mirror. It was an attempt to influence a culture without putting the hard yards in first.
Of course, efficiency has a place. In a “no-frills” offering where price is the most important thing for a customer choosing you then you must be efficient to give the customer a low enough price for your product or service. However, if you aspire to reap the competitive benefits of customer experience, then efficiency should not be your first concern – you should start with the customer and work back inside your organisation. Let’s be really clear – wanton inefficiency is never acceptable – and neither is demanding a filet mignon service of your people on a horse meat budget.
How often does your budgeting process start off with some fixed fiscal point? In my experience it rarely starts from the customer and stays true right through to execution. And unfortunately, in customer facing businesses the fiscal squeeze is on the biggest cost line, your most valuable assets – your front line staff. Despite best intentions, most businesses use efficiency and KPI management as a comfort blanket as the alternatives are too scary.
The unwithering corporate focus on efficiency metrics come from short-termism and an obsession with the 1%. A desire for control makes leaders put checks and balances in place to control the 99% of employees for fear of abuse from the 1%. This deeply impacts the culture and leadership of the company and ultimately how the customer feels about the brand and interacts with it. The, often unintentional but very real, consequences of an efficiency culture are:
- Bad hires as employee turnover is high and recruitment is under pressure. And lets face it if you get this wrong your whole customer experience strategy is built on sand.
- Rushed induction training. The new start does not feel an affinity to the brand or it’s customers.
- Inadequate ongoing training. Your people understand all about new product launches and what buttons to press on the new customer management system but they understand little about empathy or engagement.
- Bad management. The unbearable weight coming down on middle managers and front line managers when a KPI slips off track distracts managers from coaching their people and focussing on their customers.
- They often react to events and as a consequence the advisor becomes focussed on the KPI and not the customer.
- Space for agility and innovation is removed. Advisors find it really difficult to “do the right thing” as every second is accounted for. They also find it difficult to escalate obvious areas for improvement where customers are being let down.
- All customer investment is focussed on acquiring new customers or trying to retain those that have reached the end of their tether.
These outcomes are not consistent with a company that wants the benefits associated with a reputation for customer experience – great customer retention and repeat business, high employee satisfaction and advocacy and the holy grail – customer advocacy.
Companies that really understand the positive impact of a great customer experience on the value of their company do 3 things really well.
- Excel in recruiting the right people, who get their culture and want the business to succeed, and invest in them. Look at Zappos (why not, everyone does!) – they recruit using a rigorous, multi-stage process, they put everyone (even the senior execs, the accountants and the marketeers) through a 4 week customer service training programme and then they offer them $4000 to leave. Only 1% take up the offer but Zappos knows they have a committed intake.
- Trust their people that they have rigorously recruited to do the right thing. Take the often quoted Ritz-Carlton example. Every single member of staff is empowered to spend up to $2000 per guest per day to create “unique and memorable experiences” without approval from a supervisor. In the old days that would have brought me out in a cold sweat but now I understand that a trusted employee will act responsibly, and the experience will be remembered by the guest, which will translate into value.
- Take the long view and remain consistent to their goals. The power of empowered employees is cited every day as the key asset of the most respected brands but most companies are held back by a short term outlook from emulating their success.
These businesses are not frivolous – in fact one of Zappos’ values is to “do more with less”. But neither are they focussed on productivity KPIs or micro-managing daily efficiency statistics. They empower their people and give them clear guidance on what is important and they measure success in customer happiness. Sure, Zappos was a start-up that had the opportunity to start from the foundations up but turnarounds are always possible if the desire is there! Dell and Comcast are two of the most commonly cited examples of improved customer service – it is not easy, and there will be bumps in the road but why not reach for the stars?
So, at the start of the next budget round rather than starting from a bunch of stretch efficiency targets how about starting at the customer’s needs and expectations and plan from the outside-in? And you know already that doesn’t mean you should be inefficient!
Every journey starts with a first step – what will yours be?
