This month, CustomerThink is focused on Building a Customer-Centric Culture and Operation. A worthwhile goal, but how do you do that? I had the opportunity to interview Jeff Schaper when he was the Chief Commercial Officer (CCO) at General Electric, and thought for my blog this month I would share some of Jeff’s insights on how to manage this type of transition:
FOCUSING ON THE ULTIMATE CUSTOMER
We all understand that today customers typically want more than just a product. If all they need to do is complete a transaction, they can go on the web and put it out for bid. Our goal, therefore, becomes to understand what a customer really wants and needs, and in order to accomplish that we have to change our focus from the product out, to the customer back. By that I mean seeing things from the perspective of the customer looking back into the organization.
This often tends to be a struggle. We talk a lot about concepts like customer centricity, but at the end of the day we often get confused about what that really means. One of the biggest mistakes I see companies making is focusing on the ‘internal customer.’ Personally, I hate that concept, and I fight with people all the time about that phrase. Yet it’s used every day by many, many functions—marketing, HR, manufacturing, technology, etc.—all focusing on satisfying the ‘internal customer.’
You can be in the IT department in your company, and you can satisfy the needs of your ‘internal customer’, which may be manufacturing. But at the end of the day, does what you have done ultimately serve the needs of the real customer, the ‘external customer?’
For example, IT may have done a great job of supporting manufacturing in their quest to produce vanilla ice cream, and manufacturing’s productivity may be great because they are making vanilla. But what value is all of that if the external customer base wants strawberry, chocolate, and raspberry? We can easily lose sight of the needs of the marketplace if we focus only on our internal customer.
The biggest struggle most companies have, whether they realize it or not, is how to rally an entire organization, an entire company around the ultimate external customer, the one that is really paying the bills. How do you really have a customer-centric company if you have phrases like ‘internal customer?’
This challenge gets even more complicated when you weave the impact of the supply chain into the equation. A typical supply chain might involve a manufacturer, a distributor, a contractor, and then, ultimately, a customer.
Your distributor wants to be treated like a customer, but they aren’t your customer. They are part of the supply chain to satisfy the ultimate external customer. We need to develop that type of customer focus, and make sure we live and breathe that concept every day; and we need to blow up phrases that divert us from that focus.
CHANGING OUR MEASUREMENT AND REWARD PRACTICES
If we are going to overcome that hurdle, and really start to look at things from the external customer’s point of view, we may well have to fundamentally redesign our internal measurement and reward practices. Let me share the reason why this is true.
A while back we did a survey of a cross-section of people within GE. The research project dealt with a number of topics, but it included six or seven questions that revolved around the customer. In all cases, our people rated customers very high in terms of their priority and their focus.
We then followed up on this study with a focus group involving 250 people regarding what was at the heart of their day-to-day activities, and during those sessions the customer almost never came up.
I never hear anyone say, “I don’t care about the customer.” Intellectually, we all care. However, that being said, we can easily lose that customer focus. The reason this occurs is that much of what we are evaluated on is internally-focused metrics versus customer-focused, and it is human nature to give priority to the tasks by which we are measured.
We need to develop new measurements that keep the customer visible. We need to make all employees aware of their performance relative to the customer. We will still need compensation plans that reward growth, but we need to balance those with quantifiable programs that reward customer-oriented performance.
This is not just a sales or marketing issue. You need to expose virtually everybody in the company to the customer, whether they are in finance, manufacturing, maintenance, technology, it doesn’t matter. Everyone should hear what customers are saying. You need to develop active feedback mechanisms from the customer.
The customer may not always be right, but they are always the customer, and we should never lose sight of that fact. Ultimately, if you are not sensitive to customers on a daily basis, you are going to lose them. If that occurs, you are not going to attain the growth or the profitability you are counting on. And, if you don’t attain growth and profitability, there is no reason to exist.
If you’d like to read all of Jeff’s insights please email me and I will send you the full interview.