B2B CEOs, boards, investors and senior leadership teams typically squander tremendous earnings and growth opportunities by putting the cart before the horse in their views of customer experience-driven growth. This may be more prevalent among newer companies, but it’s generally universal. Your mindset about customer management overrides your values and mission statements. Your walk is louder than your talk in shaping employees’ and partners’ effectiveness and efficiency.
Consider these 3 growth mindset principles:
- Feed the hand that feeds you.
- Get things right consistently.
- Facilitate performance ownership.
1. Feed the Hand that Feeds You
Customers are the source of budgets, salaries, and dividends. In startup mode, your reliance on investors may confuse many people, but investors certainly expect customer revenue growth to reward their faith in you. Otherwise, you’re running a Ponzi scheme or hobby, rather than a business. In the quest to please investors, it’s all too common for managers to lose sight of the true hand that feeds them.
Indeed, we’re conditioned to lose sight of this. In business school textbooks and syllabuses, customers are typically discussed after economics and products. In business media, there’s no focused section on customer management, except when it’s about customer service, and then it’s lower hierarchy content. It’s only been two years since the Business Roundtable revised the purpose of a corporation, with the top-most commitment to delivering value to customers, followed by investing in employees, dealing fairly and ethically with suppliers, supporting communities, and generating long-term value for investors.
In meeting agendas, safety is prominent in manufacturing groups, but customers are prominent perhaps only among customer-facing groups — yet, even then, perhaps not. It could be eye-opening to make a quick inventory of this past quarter’s staff meeting agendas to validate or refute my supposition.
In meetings where CRM reports are discussed, the data and conversation are all about quantity and velocity, rather than relationships and mutual value. In approval criteria, forms, rewards, and decisions of all kinds, customer expectations are typically an add-on, an afterthought, or blatantly missing.
How does this fit with the reality that “customers are the source of budgets, salaries, and dividends”? It doesn’t.
While customers aren’t experts in your business, and they’re not always right, their assessment of how well you’re meeting their expectations is what you rely upon for your growth.
Granted, you can grow by acquisition and expansion for some time, but eventually, every business faces the stark reality that customer lifetime value is vital to sustainable growth in both revenue and profit.
How do you feed the hand that feeds you?
First, position customers in your business similar to the way you position your spouse and children in your family and the way you position your best buddies in your social life. They’re not add-ons, afterthoughts, or blatantly missing in your movements. Position customers as your top interest in all the places mentioned above — in everything your company does. That’s what the well-loved brands do.
Accordingly, you can help employees of all kinds to revise their charters and job descriptions in terms of why customers are paying for them. This encourages everyone to rise above industry norms to differentiate your business with customer-inspired processes and handoffs. Another key to success is to make it a habit to state goals and deadlines in the context of what matters to customers, to continually clarify the hierarchy of customers as the source of growth.
Second, learn your core-growth customers’ expectations. What are they trying to get done in their business and life through your solutions? What are their alternatives, must-haves nice-to-haves, and consequences and workarounds when things aren’t right? What does this tell you about your North Star? Test your assumptions — expectations are a moving target as customers’ dynamics evolve. Weave these findings into your company’s ecosystem to make them a way of life.
When you excel with your core-growth customers, you’re developing magnetic attraction for both new and returning customers. This hand-in-glove comfortable situation gives managers bandwidth to eventually expand customer experience excellence to your successive hierarchy of customer segments.
Customer experience = customers’ realities vs. customers’ expectations.
2. Get Things Right Consistently
An ounce of prevention is worth a pound of cure. Closing the gap between customers’ realities and their expectations is customer experience excellence. All the service, surveys, digitalization, etc. you’ve come to think of as customer experience management are optional means toward the goal of closing this gap.
Closing the gap between customers’ realities and their expectations is customer experience excellence.
Actually, rapidly expanding customer care and customer success teams may be a sign of sloppy performance by non-customer-facing groups: cutting corners and throwing problems over the fence. I call this “Jenga management“, because it’s like the party game where blocks are removed from the middle and placed on top of the tower. Think of the tower’s middle as your business operations and the tower’s top as your customer-facing groups. Negative surprises cost everyone a lot: employee morale and productivity, churn of customers and partners and employees, brand reputation, customers’ resources to be productive and to buy more, investor returns, and so on.
Instead of expanding remedial services, you should prevent hassles for customers. Your customers are as busy as you are, and they gravitate to resources and relationships that buoy them up. Since they’ve already paid fair market value for your value proposition, negative surprises are demerits to your value. Your company can stand out from the crowd by minimizing the gap between what’s promised and what’s delivered.
How do you get things right consistently?
First, educate every group enterprise-wide — no exceptions — to customers’ expectations. To do this, frequently share customer comments about their expectations and realities, at all managerial levels. Encourage every member of your senior leadership team to do this in speaking, writing, and imagery. This is more powerful and enduring than a standalone customer-centricity class.
Employees and managers typically view their jobs myopically: their job exists because every company hires that job, industry norms dictate their job’s processes and handoffs, and pressures that are arbitrary to customers take precedence in policies and daily decisions. At the same time, when any new executive steps in, the group reporting to him or her pays close attention to the new boss’s expectations. Isn’t it backward that the same — or more — attention isn’t given to customers’ expectations?
To put your money where your mouth is, base everyone’s performance standards on customer expectation insights. For example, careful study of customers’ comments on hand for one company revealed two overall expectation sets: timeliness and simplicity. Timeliness-focused customers had huge consequences that significantly reduced their spending when the timing wasn’t precise. Simplicity-focused customers avoided new-and-improved things because they were juggling so much. The discovery of these two expectation sets was transformational. In every meeting and handoff, every manager, employee, and partner could ask themselves: Is this contributing to, or detracting from, timeliness and simplicity? That’s a North Star in action.
Every supervisor across your company has triple stewardship: budget, people, and customer experience (internal and external). These 3 responsibilities go hand-in-hand; they’re inter-dependent. Effectiveness and efficiency of customer management is influenced by everything your company does. One bad apple can spoil the barrel, as we’ve seen in PR fiascos such as Wells Fargo’s phony accounts and United Airlines’ forcible removal of a passenger.
By preventing occurrence of issues for customers, you save exponentially. First, by keeping customer expectations top-of-mind for all employees prevents PR fiascos and helps clarify best choices. Second, post-sale costs to serve customers are sunk costs that must expand as your customer base expands, unless you advocate issue prevention. By doing so, customer acquisition pressure on marketing and sales is greatly reduced as existing customers stay with you longer. Furthermore, you can avoid escalations, remedies, and negative word of mouth by preventing gaps.
This is what I call “customer experience annuities.” It’s a portion of your perpetually dedicated remedial effort resources that can be freed up for re-allocation toward higher-value opportunities. This is possible through issue prevention and by preventing the recurrence of perpetual customer issues’ root causes. When you take the pebble out of your customers’ shoe, so to speak, you’re freeing up tremendous resources for everyone involved.
A study by the London School of Economics found that revenue growth is 3X higher from reducing negative word of mouth by 1% versus increasing positive word of mouth by 1%. To motivate managers, show them how much of their precious resources are going down the drain. Every manager would love to have more budget to expand, reward, and empower their team. Emphasize customer experience annuities as the key to unlocking resource expansion.
Reducing negative surprises grows revenue 3X versus increasing positive surprises.
3. Facilitate Performance Ownership
You’re only as strong as your weakest link. To reverse squandering of earnings and growth opportunities, position your Chief Customer Officer as a change agent reporting to the CEO.
The CCO’s role is to (a) develop a shared vision among the senior leadership team for how customer-focused business management will maximize value, (b) generate customer insights that inform managers how to run the business smarter than your competitors do, (c) facilitate every group’s adoption of their ripple-effect on customers’ experiences with your brand, and (d) systematize mutual value creation as a way of life across your company.
Yes, you still need to have top-notch talent and systems for customer care. However, your primary focus must be proactive if you want to maximize earnings and growth opportunities. Give the CCO direct and/or dotted-line responsibility over the various areas managing customer experience, but make sure the CCO has a team dedicated to facilitating (a) through (d) above.
By driving preventive mindsets, resources are freed up for proactive value-creation, rather than tied up in reactive value-heroics.
Remember that customer-facing groups are generally value communicators and value deliverers, whereas non-customer-facing groups are primarily value creators and value limiters.
How do you facilitate performance ownership?
First, every member of your whole senior leadership team should recognize their contributions to the success of your customer experience North Star. A true customer experience strategy is shared vision among your senior leadership team (and your board of directors) of how customer-centered management of your business will maximize value. This includes consensus on basic definitions: what is a customer, who are your core-growth customers, what is customer experience, and what is experience leadership?
It also includes an annual gap analysis of what’s in-sync or out-of-sync between your core-growth customers’ expectations (i.e. your Intentional CX, aka your North Star) and your vision, mission, values, objectives, CAPEX and OPEX criteria, etc. This gap analysis should be done in a day-long facilitated offsite with the participation of all members of your senior leadership team. You can’t underestimate the power of this in strengthening your whole company’s customer-centricity.
Second, smooth silos of all kinds. Silos exist whenever something should be connected, but isn’t. Silo-smoothing means you’re respecting the concentrated expertise and accountability of a thing/group while establishing a flow between things/groups that should be connected.
I’ve identified 10 silos that harm customer experience. Five are operational: channels, data, systems, processes, organizations. And five are executional: assumptions, vision, goals, metrics, handoffs. By smoothing the executional silos, you’re more likely to smooth the operational silos. There are 4 universal keys to silo-smoothing: build-in universality, broaden perspectives, expand motivations, and nurture collaboration.
Third, focus managers’ attention on what they can do to make a difference for customers. Conduct annual cross-functional workshops that focus each P&L on a key driver of customer loyalty for their part of the business. In these workshops, set aside an hour for reading customer comments and doing a 5-why’s exercise to identify the true root cause.
You’ll find that the business savvy of diverse representatives across your company accurately and rapidly discovers true root causes. Their customer experience improvement action plan should directly address the 5th why. An internal progress metric should monitor how well the action plan is deployed. By focusing managers’ attention on this internal metric, you empower them to see and adjust what customers will soon experience.
When I was leading company-wide customer experience leadership at semiconductor equipment maker Applied Materials, we had more than 50 groups simultaneously driving significant improvements for external customers. We also had a similar number of groups striving to make a difference for their internal customers, within the context of top priorities for external customers.
We applauded issue resolution and issue prevention through quarterly team recognition. Bonuses were based on internal progress metrics as leading indicators (you’re seeing what customers will soon experience), rather than survey scores, which are lagging indicators (you’re learning what customers have already experienced).
Experience Leadership is company-wide alignment to customers’ expectations.
Putting the Horse Before the Cart
Just like your fiduciary responsibility, customer management is not something to delegate. This is because fiduciary performance is predicated upon customer management performance. To stop squandering tremendous earnings and growth opportunities, CEOs, boards of directors, and senior leadership teams must take on a much more active role in customer management.
Your leadership responsibility is to shape behaviors to feed the hand that feeds you, get things right consistently, and facilitate customer experience performance ownership among everyone in your company’s ecosystem.
To put the horse before the cart, you should increase clarity about the fact that financials are dependent upon the effectiveness and efficiency of customer management. Always explain how your objectives and decisions will make a difference for customers. In turn, you’ll make a difference for investors. In fact, you’ll make investors even happier by expanding margin, revenue, and customer lifetime value.
NOTE: If you manage B2B customer experience, please participate in this questionnaire with 4 check-lists and 5 write-in options: The Misunderstood B2B Customer Experience. Thanks!
- 10 B2B Customer Experience Myths & How to Improve Your CX Maturity
- B2B CX Metrics & ROI Maturity: Linking Customer Expectations to Business Performance
- Four Steps to Accelerate B2B CXM Maturity and Propel Stronger Growth
- How B2B Voice of the Customer Maturity Drives Growth
- Customer Experience Growth Mindset for B2B Executives
Additional B2B CXM articles can be found on ClearAction’s Customer Experience Strategy Blog.